Telenor Group finally take exit from the Pakistani market and sold Telenor Pakistan to Pakistan Telecommunications Company (PTCL), a move which will create the largest operator in the country with an estimated 70.6 million mobile connections once closed.
During an event in Islamabad, President and Group CEO, PTCL and PTML (Ufone), Hatem Bamatraf stressed on Thursday that Pakistan’s telecom sector is just big enough for three operators to create value.
PTCL said it has entered into a Share Purchase Agreement (SPA) with the shareholders of Telenor Pakistan (Private) Limited (TPL) for the acquisition of 100% shares for Rs108 billion (roughly $385 million).
While responding to a query from Business Recorder at the event in Islamabad, Bamatraf explained that the sector has seen the erosion of value because there are so many players operating in the space.
“Relooking and consolidating the market into three players will actually protect the value,” Bamatarf said.
Ufone, a key player in the Pakistani market under PTCL/PTML, struggled to achieve the targeted market share due to poor connectivity in various areas of Pakistan. Now, with the entry of Telenor, we can hope that improved connectivity will enable Ufone to address and upgrade its connectivity issues. An expert said,
Ufone and Telenor have contagious spectrum – meaning their respective spectrum comes after another and there is another company having a spectrum in between them.
He said that this will give better service and experience to the user.
Here is the market share of different players in the Pakistani market:
PMCL (Jazz): 37.15% l CMPak (Zong): 24.82% l Telenor: 23.84% l PTML (Ufone): 13.28% l SCO: 0.90% (Source: PTA)
PTCL Chief Financial Officer Nadeem Khan said synergies will be the biggest drivers for profitability for PTCL.
As a group, he said that it is estimating Rs45 billion EBITDA after the Telenor acquisition immediately, which will improve profitability and add to synergies.
“Call it cash flow if you don’t like EBITDA. It will be equal, in just over two years, to the investment of Rs108 billion,” he said.
“We will reduce operating and capital expenditures, and we will be able to serve a much larger customer base, offer much better coverage and quality. Better coverage is going to drive both the top line and EBITDA,” he earlier said in the programme.
Mobilink / Jazz had also acquired another telecom company Warid in 2015 to become the market leader in the country.
On the legal issue of whether Ufone and Telenor are allowed to share their respective spectrums, PTCL officials said that it has happened in the past in the case of Jazz and Warid and they don’t see it as an issue.