Mobilink-Warid merger clears first hurdle with conditional approval of watchdog

Pakistan’s antitrust watchdog has given its provisional approval to the proposed merger of Mobilink and Warid.

The Competition Commission of Pakistan (CCP) has conducted a “comprehensive competitive analysis” of the proposal and granted conditional approval, although it notes that there remain “persisting concerns in areas of spectrum concentration, infrastructure sharing, non-compete obligations, and joint control”.

Invoking the authority of the country’s regulator The Pakistan Telecommunication Authority, the CCP stated that spectrum sharing should be “obligatory upon determination of inefficiently/underutilised capacity by PTA”. 

It went on to state that with regard to infrastructure sharing, the operators must “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”. MVNOs must also be provided with wholesale access to the network.

CCP added that it has place limits on “the term and scope of the non-compete obligations”, noting that to this end a firewall has been set up between Mobilink and the other telecom operations of Warid’s owner, the Abu Dhabi Group.

Mobilink controller VimpelCom and Pakistani number two Telenor were both subjected to the imposition of remedies in March 2011 which, according to the CCP, have now been “further strengthened through appointment of a third party reviewer who will report independent assessment of compliance to the Commission”.

While VimpelCom CEO Jean-Yves Charlier welcomed the CCP’s conditional approval of the merger, he noted that a further three regulatory bodies must also give the green light for the deal to go ahead. Along with the PTA, approval is also required from the Securities & Exchange Commission Pakistan and the State Bank of Pakistan. If the deal receives full approval, it will be the first merger in Pakistan’s telecoms sector.

Charlier described the Mobilink-Warid merger as “a positive step for the development of technology and communications services in the country”, adding that the resulting unit would provide services to over 45 million customers, boosting Mobilink’s current market-leading share of 29% up to 37%. The operator currently has around 36 million connections.

Currently, Warid places fifth out of Pakistan’s nine operators, with 10.7 million connections giving it an 8% market share. Telenor’s 33.8 million connections put it in second place with a 27% market share. 

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