Pakistan’s telecom industry is at a pivotal juncture, with PTCL’s planned takeover of Telenor Pakistan drawing sharp regulatory attention. Despite securing a $400 million loan from the International Finance Corporation (IFC) to back its $1 billion investment in acquiring Telenor Pakistan and Orion Towers, PTCL now faces tough questions about its financial health and strategic readiness to pull off this major deal.
The timing is delicate. PTCL’s move coincides with preparations for the upcoming 5G spectrum auction, which demands both heavy investment and clear regulatory support. Adding to the pressure, Telenor Pakistan’s CEO, Khurrum Ashfaque, is transitioning to an international role within the Telenor Group, leaving the merger at a critical leadership crossroads.
CCP Challenges PTCL’s Financial and Strategic Viability
On August 5, PTCL’s top executives appeared before the Competition Commission of Pakistan (CCP) as part of a probe under Section 11(6) of the Competition Act, 2010. The hearing centered on PTCL’s proposal to acquire full ownership of Telenor Pakistan and Orion Towers.
During the session, PTCL laid out a comprehensive business strategy, emphasizing operational efficiencies, anticipated synergies, and long-term investment plans. The company aimed to convince regulators that the merger would benefit market competition and consumers alike.
But the CCP panel—chaired by Dr. Kabir Ahmed Sidhu, alongside members Salman Amin and Abdul Rashid Sheikh—expressed serious doubts. They questioned PTCL’s ability to manage the acquisition given its ongoing financial struggles, especially considering the losses at Ufone, PTCL’s mobile subsidiary.
Transparency Concerns Over Financial Reporting
Regulators also flagged issues with PTCL’s financial disclosures. The company was instructed to provide consolidated regulatory accounts for both Ufone and Telenor Pakistan. Notably, inconsistencies in PTCL’s filings with the Securities and Exchange Commission of Pakistan (SECP) and CCP raised red flags. The CCP demanded revised submissions to clear up these discrepancies.
Industry experts warn that these regulatory hurdles and uncertainties about PTCL’s funding could stall the acquisition timeline, potentially jeopardizing the long-awaited 5G spectrum auction, which has already faced delays of more than four months.
Government Steps In to Keep the Process on Track
Recognizing the high stakes, the federal government has taken a more active role. Deputy Prime Minister Ishaq Dar is now mediating between key stakeholders, including Etisalat (a major PTCL shareholder) and the CCP, to ensure the process doesn’t stall further and to protect the 5G rollout schedule.
What’s at Stake for Pakistan’s Telecom Market?
If completed, the PTCL-Telenor merger would reshape Pakistan’s telecom landscape by shrinking the number of dominant players from four to three — Jazz, Zong, and the merged PTCL-Telenor entity. This consolidation raises questions about future market competition and consumer choice.
Critical Issues PTCL Must Resolve
- Can PTCL substantiate the $1 billion acquisition given its existing $400 million IFC loan and current financial losses?
- How will PTCL manage the financial and operational demands of integrating Ufone, Telenor Pakistan, and Orion Towers?
- Is PTCL prepared to compete effectively in the upcoming 5G auction while handling this acquisition?
- What measures will be put in place to safeguard fair competition post-merger?
The coming weeks will be crucial in determining whether PTCL can clear regulatory hurdles and secure its vision for Pakistan’s telecom future, or whether the merger’s complexities will derail a landmark industry consolidation.
