100pc shareholding in Telenor, Orion Towers: CCP to address concerns in PTCL’s proposed acquisition

ISLAMABAD: The Competition Commission of Pakistan (CCP) remains committed to addressing concerns in the ongoing Phase II Merger Review of PTCL’s proposed acquisition of 100 percent shareholding in Telenor Pakistan (Private) Limited and Orion Towers (Private) Limited.

The review is being conducted by a distinguished Bench, led by Chairman Dr Kabir Ahmed Sidhu, alongside Members Salman Amin and Abdul Rashid Sheikh.

During day-long hearing Wateen reiterated its objections to the merger, expressing concerns about its potential negative impact on the competitive balance in the market.

Jazz emphasized the need for specific conditions, such as those applied in the Warid merger, to be considered by the CCP. They urged for regulations on interconnection and tariffs to ensure a level playing field for all CMOs.

In an in-depth analysis, the CCP has thus far held five extensive hearings, beginning on September 30, 2024, with subsequent hearings on October 2nd, 3rd, 22nd, and 24th, 2024. The Bench posed critical questions regarding the potential impacts of the merger, ensuring thorough scrutiny of the competitive dynamics in the telecom sector.

Chairman CPP, having international experience of dealing in competition issues, is looking extensively into all aspects of this merger to safeguard the interests of stakeholders.

During the most recent hearing, Senior Counsel for PTCL Rahat Kaunain Hassan accompanied by Counsel for PTCL Mariam Saleem Malik presented responses to the concerns raised by Wateen, Jazz, and CM Pak (Zong) in earlier hearings. The CCP Bench facilitated discussions, offering all stakeholders, including PTCL, Wateen, Jazz, and Telenor, the opportunity to provide their respective comments.

During the hearing, the PTCL presented data showing that Merger Co would not dominate the market post-transaction, with Jazz remaining the largest in terms of subscribers. PTCL argued that the merger would promote competition by narrowing the gap between the top players—from 12.37 percent to 0.35 percent —thereby fostering a more balanced market.

Khalid Ibrahim, External Legal Counsel, Jazz emphasized Jazz’s concerns about frequency allocation, stressing that PTCL already holds a strong position in upstream markets, including spectrum, infrastructure, and IP bandwidth, which could further bolster its dominance post-merger.

PTCL emphasized the merger’s competitive benefits, particularly highlighting the expected reduction in the market share gap between the two leading players. PTCL also addressed potential risks of input and customer foreclosure, outlining the evaluation principles, while highlighting the merger’s efficiencies, including cost savings, increased network capacity, accelerated technological advancements, and the roll-out of 5G services. PTCL assured the Bench that the Merge Co would fully comply with the Spectrum Sharing Framework, once issued by the Pakistan Telecommunication Authority (PTA), thereby adhering to all regulatory requirements.

Jazz and Wateen, in turn, reiterated their concerns over critical industry matters, particularly tariff regulations, infrastructure sharing, national roaming, and the operations of Cellular Mobile Operators (CMOs).

Throughout the proceedings, CCP officials, including Shahzad Hussain (Director General/Registrar), Barrister Ambreen Abbasi, Hafiz Naeem, Arshad Javed (Legal Department), Marryum Pervaiz (HoD Merger Department), Noman Ahmed (Merger Department), raised pertinent questions, ensuring a comprehensive review process.

The CCP is committed to ensure that any potential competitive risks arising from the merger are fully addressed, safeguarding market competition and consumer welfare.

During the hearing, PTCL made a compelling case before the Competition Commission of Pakistan (CCP) regarding its 100 percent acquisition of TP and Orion Towers, highlighting its benefits for competition, the country’s technological advancement and consumer welfare. PTCL assured regulators that the acquisition complies with the legal framework, ensuring no harm to competition, in fact enhancing competition by placing itself as a close rival to current market leader Jazz.

Wateen’s attempt to redefine markets in relation to the merger was strongly contested by PTCL’s counsel, who argued that market definitions are determined by the Pakistan Telecommunication Authority (PTA) through a consultative process. They stressed that such definitions should not be altered to protect competitors but should reflect industry realities set by the regulator.

Addressing spectrum issues, PTCL confirmed that its post-merger spectrum holdings not only align with domestic and international standards they are in proportion to increase in subscriber base. The company also noted that the Pakistan Telecommunication Authority (PTA) will auction additional spectrum in 2025, further opening opportunities for the industry.

Counsel for PTCL, Madam Rahat Kaunain and Mariam Saleem, stressed that this acquisition will accelerate the roll-out of 5G technology in Pakistan, improve connectivity, and enhance service quality. With streamlined operations and more efficient use of spectrum, PTCL aims to deliver faster, more reliable networks, helping Pakistan catch up with global technology trends. The merger is positioned as a vital step in modernizing the country’s telecommunications infrastructure, fostering economic growth, and enhancing digital services for consumers nationwide.

Rahat Kaunain Hassan, senior Counsel PTCL stated that the pre-merger application is focused on PTCL’s acquisition of Telenor Pakistan (TP). After this acquisition, TP will become a subsidiary, and PTCL will then proceed towards a more detailed amalgamation scheme. She indicated that more information on this will be provided later as the process evolves.

Responses to Stakeholders’ Concerns: Rahat provided point-by-point responses to concerns raised by stakeholders like Wateen, Jazz, and CM Pak. This included addressing issues related to market dynamics and the anticipated effects of the merger on competition.

Chairman CCP Dr Kabir Ahmed Sidhu raised questions to PTCL regarding the thoroughness of their due diligence process, seeking clarity on their evaluation methods during the transaction.

Shabbir Harianawala, counsel, Telenor reiterated Telenor’s rationale for the merger, emphasizing the transaction’s alignment with Telenor’s strategic plan and global objectives, including efficiency improvements and market positioning.

Ambreen Abbasi, Senior Legal Advisor highlighted specific clauses in the CCP’s Merger Regulations, emphasizing the Commission’s mandate and scope in evaluating the proposed merger under the competition law.

Rahat addressed the challenges in providing detailed data for analysis at the current stage, particularly concerning the amalgamation process and its implications.

The PTCL underscored that the definition of relevant markets follows PTA regulations, which involve detailed data analysis, transaction scope assessments, and a methodology that considers practical indicators to define market boundaries.

PTCL and other parties discussed the potential risks of input and customer foreclosure, where PTCL could theoretically disadvantage competitors. However, PTCL referenced international cases, arguing that PTA’s regulation minimizes these risks and that any claims of harm must be backed by substantial evidence, not just assumptions.

The PTCL committed to complying with the forthcoming PTA Spectrum Sharing Framework, ensuring that any spectrum-sharing requests from new market entrants would be handled fairly and without discrimination.

PTCL assured that it would uphold all agreements with infrastructure-sharing partners, ensuring uninterrupted services for other operators during any site or network changes, in line with existing contracts and regulations.

PTCL highlighted expected benefits, including cost savings, increased network capacity, faster technological advancements, and an accelerated 5G rollout, which could enhance overall service quality for consumers.

Copyright Business Recorder, 2024