VimpelCom and Warid Telecom have won approval from the Competition Commission of Pakistan (CCP) to merge their local mobile units, subject to multiple conditions.
VimpelCom (NASDAQ:VIP) and Warid Telecom have won approval from the Competition Commission of Pakistan (CCP) to merge their local mobile units, subject to multiple conditions.
CCP said in a statement that its assessment of the proposed deal, carried out in consultation with the merging parties, their rivals and the Pakistan Telecommunication Authority (PTA), uncovered competition concerns which have been “alleviated by countervailing factors and efficiencies”.
“The Commission identified some persisting concerns in areas of spectrum concentration, infrastructure sharing, non-compete obligations, and joint control for which conditions have been imposed,” the watchdog said.
VimpelCom and Warid agreed to merge the mobile units in late November last year. Together, VimpelCom’s Pakistan Mobile Communications (Mobilink) and Warid Telecom, owned by shareholders in the Abu Dhabi Group, which manages the investments of Abu Dhabi sheikh Nahyan Mubarak al Nahyan and affiliates, will serve 45 million customers, the companies said at the time. It will also have the largest network with almost 5,000 3G and 4G sites.
To address spectrum concentration concerns, CCP said it has made spectrum sharing obligatory “upon determination of inefficiently/underused capacity by PTA”.
The regulator has also directed the parties to give guest operators on its cell sites the option to buy sites directly or via auction if there are multiple guests. It has also required them to provide wholesale access to potential MVNOs.
CCP said the terms and scope of the parties non-compete agreement has been restricted and a firewall built between Mobilink and other members of the Abu Dhabi Group in the telecoms sector.
In addition, a third-party reviewer has been appointed to report to the CCP on the companies’ compliance.
Mobilink is currently the mobile market leader in terms of customer numbers, while Warid is the fifth of the country’s six MNOs.
Amsterdam-based VimpelCom, which has core operations in Russia, owns 51% of Global Telecom Holding (GTH), which in turn owns Mobilink.
The deal value has not been disclosed, but the companies said in November that it is expected to create about US$500m of capex and opex synergies. The Pakistani operators’ combined revenues for the 12 months to December was US$1.4bn.
The acquisition part of the deal would see Mobilink acquire 100% of Warid’s shares in exchange for Dhabi Group taking a 15% stake in Mobilink. Six months after this closes, the parties intend to merge Warid into Mobilink. No cash contributions are expected from VimpelCom/GTH or Dhabi Group shareholders.
VimpelCom would consolidate the mergeco and, together with GTH, nominate six of its seven board members, while the Dhabi Group would nominate one.
