Telcos merger nears settlement
The Competition Commission of Pakistan (CCP) is expected to grant approval to the merger of Telenor Pakistan with Pakistan Telecommunication Company Limited (PTCL) if its settlement option is accepted, which comes following intervention from the Special Investment Facilitation Council (SIFC).
PTCL's merger application has been pending for the past almost one year as its management has yet to provide relevant documents to address scores of queries.
A CCP letter sent to PTCL lawyer Rahat Kaunain Hassan in the case refers to Section 11(11) of the Competition Act 2010, offering a new settlement option to the company.
PTCL sources revealed that the option provided by the CCP included an investment of around $1 billion by the UAE-based telecom company e& (erstwhile Etisalat) that holds management control of PTCL.
According to sources, the CCP has sought timelines and details of areas where PTCL will make the proposed investment.
Clause 11 of Section 11, quoted in the CCP letter, states that in case the commission determines that the merger transaction under review does not qualify for the specified criteria, the commission may prohibit the consummation of the transaction.
The law further states that the CCP can approve such transaction subject to conditions laid by the commission in its order and also approve such transaction on the condition that the said undertakings enter into legally enforceable agreements specified by the commission in its order.
Sources in the Ministry of Information Technology and Telecommunication said that the Competition Commission's decision on PTCL's merger application had been pending for almost a year as company management had yet to provide relevant documents to respond to several queries.
A senior IT ministry official also pointed out that the issue of outstanding payments of $800 million had also remained unresolved. Though a settlement was reached between the previous government and the PTCL management for releasing $640 million, the company has not even provided that amount.
The new option of $1 billion worth of investment has been given following intervention of the SIFC, which was approached by the PTCL management.
Meanwhile, PTCL is also facing notices from the telecom regulator, Pakistan Telecommunication Authority (PTA), for being a significant market player in several sections of the telecom industry.
During the second phase of the review of merger application, the Competition Commission sought details related to market position of PTCL from the PTA to determine that the intended merger would not reduce competition or strengthen the dominant position of the parties concerned.
Documents submitted by the PTA to the CCP showed that instead of addressing the objections made by the telecom regulator, the PTCL management challenged notices in Sindh High Court.
PTCL had submitted its application for the merger of Telenor Pakistan to the Competition Commission on February 29, 2024, but there were flaws in the application that was corrected on March 6, 2024.
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