The Competition Commission of Pakistan (CCP) approved the merger of Mobilink and Warid conditional upon the operators complying with a number of remedies.
The country’s antitrust watchdog said it undertook a “comprehensive competitive analysis” of the deal and found it raised certain “persisting concerns in areas of spectrum concentration, infrastructure sharing, non-compete obligations, and joint control”.
Regarding these issues, it said spectrum sharing should be “obligatory upon determination of inefficiently/underutilised capacity by PTA”. PTA is Pakistan Telecommunication Authority, the country’s regulator.
On the subject of infrastructure sharing, the CCP directed the operators “to provide guest operators on their cell sites a first option to buy the site, directly or through an auction if there is more than one guest operator”. In addition, it said wholesale access must be provided to potential MVNOs.
As for the non-compete issue, the CCP said it has restricted “the term and scope of the non-compete obligations” and that a firewall has been created between Mobilink and other businesses of the Abu Dhabi Group (owners of Warid) in the telecom industry.
It added that the remedies imposed on Mobilink’s parent company VimpelCom and Telenor (which raised concerns over the merger last month) in March 2011 to address the issue of joint control “have been further strengthened through appointment of a third party reviewer who will report independent assessment of compliance to the Commission”.
VimpelCom said this is the first of four required approvals from local regulatory bodies. In addition, green lights are needed from the PTA, Securities & Exchange Commission Pakistan and the State Bank of Pakistan still need to make a decision.
Its CEO, Jean-Yves Charlier, said the company was pleased with the CCP’s approval, adding that the merger would be “a positive step for the development of technology and communications services in the country” and that the new entity would serve more than 45 million customers.
VimpelCom announced in November it planned to merge with Warid, which would expand its dominant market share from 29 per cent to about 37 per cent. Warid is the fifth largest player with 10.7 million connections and an 8 per cent market share.
Telenor is number two with a 27 per cent market share and 33.8 million connections, according to GSMA Intelligence. Market leader Mobilink currently has a user base of about 36 million.
Last month, Telenor complained to the CCP that the merger could “negatively impact the industry”, which has faced high taxes that have curbed growth.
If the deal is approved, it will be the country’s first merger in the telecoms sector, which has nine players serving a user base of 127 million.