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Etisalat-Warid Deal Raises Socio-Economic and National Concerns

By  | 04, Dec 2013 | 5 Comments

Etisalat2 Etisalat Warid Deal Raises Socio Economic and National Concerns

Possible Etisalat-Warid deal – which is nearing its announcement – has raised various national concerns, while government authorities have already started to evaluate the socio-economic impacts of the outcome.

Federal government has speeded-up its homework to look at options for halting the deal to get maximum payout out of outstanding $800 million from Etisalat that it owes against 26 percent stakes purchase in PTCL back in 2005.

Besides government, Competition Commission of Pakistan and Security and Exchange Commission of Pakistan is also actively monitoring the situation.

CCP is considering to question both the parties, if deal goes through, about possible monopolization of cellular and data services. Apparently, cross-subsidiary cartelization is possible especially when PTCL has over 2 million broadband subscribers, 3.5 million landline customers and Ufone-Warid will have over 35 million cellular subscribers.

As mentioned above, deal may also face hurdles during the second phase of evaluation by CCP because of Etisalat defaulting on payment to Government of Pakistan.

It merits mentioning here that anyone from public can get to Competition Commission of Pakistan with their concerns over the deal.

SECP is more concerned about Warid’s liabilities. While they will be taken care of by Etisalat – if acquired – SECP understands that Etisalat’s reputation, given the track records, for clearing liabilities isn’t very impressive.

Experts say that the deal, if goes successful, may not turn out well for Pakistan’s economy in the long run. For example, down the line, both Ufone and Warid will have to merge their operations resulting into fewer work-force requirements and hence the layoffs.

Not only that the merged company will get rid of extra resources but will also free-up a telecom license that pays Government around $294 million in fee every 15 years or $20 million a year.

Moreover, if bought, Warid will no longer require 3G license which it must get otherwise — not initially maybe but certainly in 2-3 years from now — for which they will have to meet the price of successful bidding value.

While understanding the fact that government will have to safeguard the investors’ interest, Dhabi Group in this case, it can not give a green signal to a transaction that may cause huge social impacts.

Only time will tell government’s position on the matter, for which – according to sources – we won’t have to wait for long now.

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  • Son of the soil

    Aamir I am sorry this seems to me to be pretty one sided. Warid is failing and needs someone to acquire it to survive. The only other options are Mobilink, Telenor and Zong. Mobilink won’t acquire it because CCP will never give clearance to it for similar reasons. If Ufone cannot acquire it like the case you make above CCP n all, Telenor which is not interested anyway, won’t be able to acquire.

    This only leaves Zong for which many interested parties are pushing and also publishing news stories. I think there is some agenda here but Zong has made it very clear they are not interested.

  • Jamal Shah

    I am a customer of Warid since 2005 and i never dialed their helpline. Never had a need to do that. I thin if someone will buy Warid, they will even make it better.

  • Guest

    Such mergers are part of corporate cycles and if GOP will not allow it, that too will have great consequences for our struggling economy. GOP, SECP and CCP should also understand other aspects before making any move.

  • Farooq Ahmad Meo

    It may be a conspiracy against Pak Telecom Sector that seems to be captured by some strong behind foreign anti Pakistan forces. U will agree with me that all Telecom companies belong to foreign countries. Not a single belong to Pakistan, that is very shocking for a loyal Pakistani. In case a world war likely Crusade wars Pakistani Telecom sector can JAM from out of our country. Where we stand for ?

    Farooq Ahmad Meo

    • http://www.isharearena.com/ M.Aswad Mehtab

      You think there is a switch out there some where that if hit can JAM our telecom sector ? well guess what that can be happen to your own network as well :D