CCP gives conditional approval to Mobilink Warid merger
The Competition Commission of Pakistan (CCP) has approved the proposed merger of Pakistan Mobile Communications Limited (Mobilink) and Warid Telecom (Private) Limited (Warid). The merger approval is conditional upon compliance with the remedies imposed by CCP.
This approval is the first of four required approvals from the local regulatory bodies, including Pakistan Telecommunication Authority (PTA), Securities and Exchange Commission Pakistan (SECP) and the State Bank of Pakistan (SBP). The transaction is the first major merger in the mobile telecommunications sector in Pakistan.
The bench hearing the matter comprised of Vadiyya Khalil, the Chairperson, Dr. Shahzad Ansar, Member Office of Fair Trade and Advocacy, and Ikram Ul Haque Qureshi, Member Cartels and Trade Abuse and Legal.
CCP has undertaken a comprehensive competitive analysis of the merger to determine if it substantially lessens competition by creating or strengthening a dominant position. The assessment has been undertaken on the basis of extensive consultation with the merger parties, competitors and the Pakistan Telecommunication Authority (PTA).
While conducting its assessment, the Commission noted that the merger raised competition concerns, which were 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.
In relation to the spectrum concentration, the Commission has made spectrum sharing obligatory upon determination of inefficiently and underutilized capacity by PTA. With respect to infrastructure sharing, the Commission has directed the parties to provide guest operators on their cell sites the first option to buy the site, directly or through an auction, if there is more than one guest operator. To facilitate entry in the future, the Commission has imposed an obligation to provide wholesale access to potential Mobile Virtual Network Operators (MVNOs).
To address the concern regarding the non-compete agreement, the term and scope of the non-compete obligations have been restricted. A firewall has been created between Mobilink and Abu Dhabi Group’s other businesses in the telecom industry. The remedies imposed on VimpelCom and Telenor Group by virtue of the Commission’s order dated 17 March 2011 to address the issue of joint control have been further strengthened through the appointment of a third party reviewer who will report an independent assessment of compliance with the Commission.
Commenting on the approval, Jean-Yves Charlier, CEO of VimpelCom, said, “We are pleased that the Competition Commission of Pakistan has approved our request to merge the two businesses. The combination of Mobilink and Warid will be a positive step for the development of technology and communications services in Pakistan. Together, the future entity will serve more than 45 million customers through a best-in-class mobile and high-speed network, and bring further investment into infrastructure and digital services for consumers in Pakistan as they navigate the digital world.”