PTCL seals Rs108 billion deal to acquire Telenor Pakistan in telecom sector mega merger

WEB DESK: In a significant consolidation within the telecom sector, Pakistan Telecommunication Company Limited (PTCL) has finalised a Share Purchase Agreement (SPA) with the shareholders of Telenor Pakistan (Private) Limited (TPL) for the acquisition of 100 per cent shares at the value of Rs108 billion ($385 million).

PTCL officially communicated this development in its notice to the Pakistan Stock Exchange on Thursday, settling the ongoing speculation regarding the future of Telenor Pakistan in the country, which has been a subject of much debate over the past year.

Quoting from their letter dated August 29, 2023, where the Board of Directors (BoD) of PTCL had authorised the company to present a binding offer to the target company, the notice stated, “In view of the above, this is to notify your good office(s) that consequent to the approval of the BoD of the company, it has entered into a Share Purchase Agreement (SPA) with the shareholders of TPL for the acquisition of 100 per cent shares of TPL, based on an enterprise value of Rs108 billion on a cash-free, debt-free basis.”

The transaction, financed by external debt, is anticipated to enhance the capabilities of the combined entities, resulting in improved coverage and service quality for customers.

Furthermore, it will provide broader access to communication solutions for businesses, contributing to the economic growth of Pakistan, as stated by PTCL.

PTCL’s share price experienced an upper limit on Thursday, with over 1.76 million shares changing hands and priced at Rs13.01 at the time of this report.

Telenor Pakistan, serving nearly 45 million subscribers with reported revenue of Rs112 billion based on the last twelve months (LTM) of September 2023 financial reporting, will be a strategic addition to PTCL.

PTCL’s major assets also include Ufone, a mobile operator in Pakistan with over 20 million customers, operated under an agreement with the government of Pakistan by Etisalat, which holds a significant minority stake.

“The transaction provides an opportunity for in-market consolidation in the telecom market, which will predominantly lead to an improved long-term outlook for the telecom sector,” commented PTCL in a statement. “We expect that the combined infrastructure assets of both entities will unlock value in synergies, supporting Pakistan’s digital transformation.”

In a separate statement, Telenor Group mentioned that the transaction valued Telenor Pakistan at NOK 5.3 billion on a cash-and-debt-free basis. The CEO of Telenor Group, Sigve Brekke, expressed, “By selling to the country’s largest integrated ICT company, we believe this consolidation move would help strengthen Pakistan’s telecoms sector, creating opportunities in new areas of growth to the benefit of consumers in Pakistan.”

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Petter-Børre Furberg, Head of Telenor Asia, added, “We systematically considered all alternatives during the strategic review process and believe that, following a sale, the market will be better served by a strong local champion.”

The agreement is subject to regulatory approvals and other customary terms and conditions, with the transaction expected to be completed in 2024. Telenor Pakistan will continue its business as usual, focusing on delivering services to its 45 million customers.

Earlier, PTCL informed the bourse that its BoD had authorised the company to explore potential investment opportunities in the telecom sector in Pakistan.