Official: Mobilink and Warid Merge into One Company

Mobilink and Warid are merging into one company, we have received the confirmation that we were looking for over several weeks now.

According to official statement issued by VimpelCom, both Warid Telecom and Mobilink will merge into one company with 45 million combined customers.

Our sources tell that signing ceremony has been completed and now both companies are going to hold a press conference in Lahore later today to announce the details.

Upon successful completion of the transaction, which may take up to one year, Mobilink’s CEO Jeffrey Hedberg will become the CEO of the combined business and Mobilink’s CFO Andrew Kemp will become the CFO of the combined function.

The board of the merged company will consist of seven directors, of whom six will be nominated by VimpelCom and GTH (Mobilink) and one nominated by the Dhabi Group shareholders.

A notice sent from Mobilink to Karachi Stock Exchange said that merged entity will have combined revenue of 1.4 billion dollars for 12 months till September 2015, while EBITDA margin of above 40%. It further said that the transaction is expected to create Capex and Opex synergies with a net present value of approximately USD 500 million.

Notice said that merged entity will have a strong financial profile with Pro Forma Leverage in terms of Net debt/EBITDA or around 1.8x upon signing, that will trend further downwards as synergies materialize.

Commenting on the agreement, Jean-Yves Charlier, Chief Executive Officer of VimpelCom, said:

“We are delighted to announce the agreement with the Dhabi Group shareholders today to combine our businesses in Pakistan.

With the addition of Warid to our already strong customer base at Mobilink, we will serve more than 45 million customers and offer a best-in-class mobile and high-speed data network – a key factor in the digital enablement of Pakistan’s economy.

This transaction follows a number of strategic milestones for the company, including our recent joint venture announcement with WIND and 3 Italia in Italy and the agreement to sell our operations in Zimbabwe.

This is yet another important step in our journey to continue delivering on our strategy to transform VimpelCom and improve our competitive position in our operating markets.”

Chairman of Dhabi Group, His Highness Sheikh Nahyan Mubarak Al Nahyan, said

“Creating the largest operator in Pakistan is a significant milestone for Mobilink and Warid but also for Pakistan as a whole.

Warid’s partnership with Mobilink will create value for all stakeholders and pave the way for exceptional and cost-efficient telecommunication services for customers.

Both parties bring their unique strengths to this merger. Warid, with its strong post-paid base and high quality 4G/LTE network will complement Mobilink’s position in the market.

We are very pleased to continue to contribute to the strengthening of the competitive landscape for the broader telecom sector and the overall economy of Pakistan. The transaction reaffirms my own and my fellow investors’ long-standing and continuing commitment to Pakistan.”

Additional details of the Transaction

As part of the Transaction, Mobilink will first acquire 100% of Warid’s shares in consideration, while Dhabi Group shareholders will get approximately 15% of the shares of Mobilink. This process may take up to six months from today and is subject to regulatory approvals.
After this Warid and Mobilink will merge into one company, that will require another six months to close and regulatory approvals.
After a four year lock-in period following the date of closing of the Acquisition Transaction, the Dhabi Group shareholders will have the option to put their shares of the merged company to VimpelCom/GTH, and VimpelCom/GTH will have the option to call the shares of the merged company held by the Dhabi Group shareholders, each at fair market value.

While announcing the merger, Jeffrey Hedberg, President & CEO Mobilink, sent following email to Mobilink employees:

Dear Colleagues,

When I joined Mobilink a year and half ago, I promised you that together we will do exciting things. The milestone that I am about to share with you is not just one of the greatest that the industry has ever seen but is more importantly a testament of the hard work that we have put in as a team.

I am pleased to announce that we have just reached an agreement with Dhabi Group to merge Mobilink and Warid Telecom, subject to approval from relevant authorities.

This transaction will be one of the first mergers in the telecommunication sector in Pakistan’s corporate history. It marks another key step in VimpelCom’s global strategy to transform the company.

What this merger will mean is that whether you are part of Warid or Mobilink you will all be part of the largest, the longest standing, the fastest and most importantly, the most preferred mobile operator for the people of Pakistan.

Our combined operations will serve 45 million mobile and broadband subscribers in Pakistan. I congratulate you all on this great achievement and for all the work you have put in.

Let us all cherish this milestone and continue to capitalize on the culture of performance and delivery with which Mobilink has become synonyms. Let us keep our customers at the center of everything we do, at all time, and let us focus on creating the best customer experience that Mobilink has been known for over the past two decades.

I am confident that as one team, we will continue to support each other in every way possible and make this transaction the most successful in history of telecom industry of Pakistan.

Here is one team, one spirt and one vision,

Have a great day everyone.

Regards,
Jeffery