PTCL’s acquisition of Telenor, Orion Towers: CCP told there are no immediate competition concerns

ISLAMABAD: The Competition Commission of Pakistan (CCP) was informed Tuesday that there are no immediate competition concerns arising from the transaction of PTCL’s acquisition of Telenor Pakistan and Orion Towers.

The Competition Commission of Pakistan (CCP) has advanced to the fourth hearing of its Phase II Merger Review regarding PTCL’s proposed acquisition of 100% shareholding in Telenor Pakistan (Private) Limited and Orion Towers (Private) Limited. The review is being conducted by a Bench comprising Chairman Dr. Kabir Ahmed Sidhu, alongside Members Salman Amin and Abdul Rashid Sheikh.

The hearing has been adjourned till October 24, 2024.

Acquisition of Telenor, Orion Towers: PTA gets application

During the hearing, former Chairperson CCP, representing PTCL, Rahat Kaunain responded by indicating that they do not see any immediate competition concerns arising from the transaction. However, PTCL stated that they are willing to provide a detailed response if the CCP’s Bench considers it necessary for the review process, top competition expert added.

This in-depth review focuses on potential market power concentration, competitive dynamics, and broader impact on the telecommunications sector. During the recent hearing, submissions were made by Asad Ladha, External Counsel CM Pak (Zong), accompanied by Sameen Qureshi. The Pakistan Telecommunication Authority (PTA) was represented by Amer Shahzad, DG (Wireless – Licensing). The CCP Bench also provided opportunities to PTCL, Wateen, Jazz and Telenor to present their comments during the hearing.

A key concern raised during the hearing was spectrum allocation. As a scarce resource, spectrum is a critical determinant of market power for Mobile Network Operators (MNOs), with each frequency band offering distinct efficiency and coverage attributes. Post-transaction, the MergerCo is expected to control 34.4% of the total allocated spectrum in the retail mobile telecommunications market.

In previous hearings, legal counsel from PTCL, Wateen Telecom, and Jazz, presented their perspectives on the merger’s implications. The CCP’s officials included Shahzad Hussain (Director General/ Registrar), Barrister Ambreen Abbasi, Hafiz Naeem, Arshad Javed (Legal Department), and Marryum Pervaiz (HoD Merger Department).

During the hearing, the CM Pak Asad Ladha emphasised the importance of analysing spectrum allocation for the merger, highlighting that such analysis is critical to understand market impacts. He suggested that the CCP consider imposing ancillary restrictions.

CM Pak proposed that ancillary restrictions could include a non-compete clause, which would require PTCL to file an exemption application with the CCP. Such restrictions aim to limit anti-competitive behaviour by setting boundaries on business operations after the merger.

It presented data showing spectrum shares before and after the transaction. Post-merger, Zong would hold 23.46% of the spectrum in the 900 MHz band, positioning the MergerCo in a dominant market position, particularly in regions like Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (GB).

During the hearing, Amer Shahzad, PTA DG Licensing confirmed that there is currently no availability of 900 MHz spectrum, as it has already been allocated to various Cellular Mobile Operators (CMOs).

He noted that additional spectrum options could become available by 2025. He acknowledged CM Pak’s observation regarding the combined Telenor-Ufone spectrum share (39.60%) compared to Zong’s (19.80%).

The stakeholders informed that spectrum is a scarce resource that directly influences an MNO’s ability to compete. Higher spectrum shares often translate to a competitive advantage in terms of coverage and service quality, making spectrum allocation a critical factor in market assessments.

Each spectrum band offers unique benefits in terms of coverage and signal efficiency. Post-transaction, the MergerCo would control 34.4% of the total spectrum allocated for the retail mobile telecommunications market, leading to concerns about increased concentration and potential market dominance.

The stakeholder stressed that spectrum allocation mechanisms in Pakistan follow specific regulatory processes, but equality in spectrum distribution is not assured globally. Allocation depends on factors like investment policies, quality of service, and coverage priorities.

The CCP Barrister Ambreen, Senior Legal Advisor inquired whether there are any existing PTA policies regarding the divestiture (selling or transferring) of spectrum assets by the operators.

Amer Shahzad, PTA, DG Licensing referred to the ‘Spectrum Sharing Policy’ set by the PTA, which outlines the conditions under which spectrum sharing can occur between operators. This policy aims to enhance spectrum utilization and address capacity issues.

Copyright Business Recorder, 2024