CCP yet to receive information on merger in telecom sector

ISLAMABAD: The Competition Commission of Pakistan (CCP) is still awaiting the submission of information by the Pakistan Telecommunication Company Limited (PTCL) regarding its proposed acquisition of 100% shareholding in Telenor Pakistan.

PTCL’s intention to acquire 100% shareholding in Telenor Pakistan and Orion Towers Private Limited is a development in the telecom industry. The CCP received PTCL’s pre-merger application on 29th February 2024, initially submitted with an incorrect fee. The outstanding fee was later remitted to the Commission on 6th March 2024.

“Despite a request for further information on 20th March, 2024 to complete its due diligence, the CCP is yet to receive the required information from PTCL’s lawyers” the CCP stated in its statement issued on Monday.

The Commission has 30 working days to complete its due diligence after all the required information is submitted. The 30 working days timeframe for the first phase review will commence after PTCL lawyers submit the outstanding information requested by the Commission.

It is pertinent to mention that the CCP’s merger department is processing 21 applications at the moment. The acquisition of Telenor by PTCL is one of those applications.

There were altogether five undertakings operative in Pakistan’s mobile telecom industry. This included Jazz, Zong, Telenor Pakistan, Warid and Ufone. Jazz acquired Warid in 2016. PTCL has a wholly-owned subsidiary called Ufone. The acquisition of Telenor by PTCL will reduce the number of competitors offering telephony service in the market.

The sources said that the Commission has also received concerns from a competitor regarding the intended acquisition by PTCL. The CCP will complete its due diligence in due course.

The CCP approves mergers in accordance with Section 11 of the Competition Act, 2010, and the Competition (Merger Control Regulations). Under these regulations, mergers that do not strengthen a dominant market position are subject to Phase-I review, typically concluded within 30 days pending the submission of required documentation. However, in the case of the proposed acquisition of Telenor Pakistan by PTCL, the process has been delayed due to the incomplete submission of information by PTCL’s lawyers.

For mergers that are likely to significantly reduce competition by creating or strengthening a dominant position, a more rigorous Phase-II review is conducted, lasting up to 90 days, contingent upon the submission of comprehensive documentation.

The thresholds set by CCP for mergers include party size and transaction size. For party size, if one of the merging parties’ assets exceeds Rs300 million or the combined assets surpass Rs1 billion, or if one party’s annual revenue exceeds Rs500 million or parties’ combined revenue surpasses Rs1 billion, the merger falls under CCP’s scrutiny. Additionally, for transaction size, if the transaction value exceeds Rs100 million or if one party acquires 10% or more voting rights in another party through share acquisition, the merger is subject to CCP’s review.

Referring to a number of newspapers publicizing misleading information on behalf of CCP regarding the progress of pre-merger application of PTCL, the CCP has cautioned media to avoid speculation and dissemination of premature information about the merger. For accurate information, they are encouraged to contact the Commission directly.