ISLAMABAD: The Competition Commission of Pakistan (CCP) expressed grave concerns about PTCL’s financial sources, corporate ethics, and lack of openness in important documents, which caused additional delays in the planned merger of Telenor Pakistan with Pakistan Telecommunication Company Ltd (PTCL).
Sources claim that the CCP has criticized PTCL for not submitting the necessary paperwork and has requested thorough explanations of the company’s post-merger investment plans, especially in view of the company’s continuous losses.
In order to offset current losses and finance future capital expenditures, including as participation in the impending 5G spectrum auction, the commission has also questioned whether Etisalat (e&), the parent company of PTCL and Ufone based in the United Arab Emirates, plans to infuse new shares.
The CCP has requested in its statement that PTCL pledge to the legally obligatory investment commitments stated in its previously submitted business plan. The business has been ordered to reveal the financial sources for the planned capital expenditures. The commission questioned how profitability would be attained after the merger and pointed out that both PTCL and Ufone are suffering large losses. It also wanted to know if bank loans or an equity infusion would be used to finance the transaction.
CCP queries the acquirer’s investment intentions, business ethics, and financial capacity.
A lack of openness in data pertaining to international direct dialling (IDD) services was another issue that the CCP brought up in relation to PTCL’s business practices. The Commission has requested thorough billing between PTCL and Ufone, as well as comparisons with other significant telecom companies including Jazz, Zong, and Telenor, as well as accurate data on volumes and rates charged for various IDD destinations from 2022 to 2024.
The CCP found disparities in a number of revenue streams under the “Other Core Products” and “Other Retail/Wholesale” categories in its examination of PTCL’s financial reports. These entries, which lack accompanying information on service volumes or rates, demonstrate significant income.
The CCP also pointed out that important information about party transactions, transfer price, and access agreements was missing. It said that PTCL’s answers were unclear and that a number of them were either general or lacking information.
In its formal letter to PTCL, the CCP pointed out that “PTCL has once again not provided the exact information in these questions and has given generic statements instead of providing the exact data/information.”
Due to unclear financial and operational plans, the commission is becoming increasingly doubtful of the merger, casting doubt on the deal’s feasibility and its effects on market competition.
SOURCE: DAWN NEWS
