Earlier today Mobilink and Warid jointly held a press conference in Lahore where CEOs and CFOs of both the companies briefed the media about specifics of the Mobilink-Warid merger. To ensure that our readers don’t miss any bit of the media briefing, we are presenting for our readers the complete (un-edited) transcript of the press conference.
Complete transcript of Mobilink-Warid Merger Press Conference
Omar Manzoor, Direction Communication at Mobiilink: We will start the proceedings with the recitation of Holly Quran.
Recitation of Soorah-e-Ikhlaas by Mr. Ateeq.
Omar Manzoor: JazakAllah. Thank you very much, representatives from the media and journalist community. Welcome to the press conference, announcing the merger of Mobilink and Warid. I would like to start by introducing the members on the head table.
Starting from my left is Mr. Andrew Kemp, who is Chief Financial Officer for Mobilink, next to him is Mr. Jeffrey Hedberg, CEO of Mobilink, Mr. Muneer Farooqui, CEO of Warid, and Mr. Tariq Gulzar who is Chief Financial Officer for Warid.
With that I would l like Mr. Jeffery Headberg to share his thoughts on why we are here tonight.
Jeffrey Hedberg, CEO, Mobilink: Mera Naam Jeffery Hai [Unintelligible] I would like to welcome you all very much, the media representatives of the press and on behalf of our entire team I would like to thank you for taking the time and initiative for coming today and attending this press conference.
We have come a long way since the inception of GSM industry in Pakistan, when Mobilink first started its operations in 1994. Lately we have managed to achieve a lot, that we could be proud of not only in terms of what we have been doing in providing accessibility and affordability to our customers but also giving back to the community across Pakistan.
We have now reached a very significant milestone, and a significant stage in the next developments of the telecommunication sector after our first step entering the next generating mobile services.
We have also successfully managed to secure the largest BVS verification campaign and we have the largest verified customers’ database of the GSM industry.
With these milestones achieved, Moblink has been leading the industry on both strategic as well as operational level.
It is now time that another important step in the mobile communications sector of Pakistan and yet again Mobilink, with our partner Warid, is leading.
Ladies and gentlemen, I am very proud to share with you that the long anticipated, first merger in mobile telecommunication sector in Pakistan, has finally become a reality.
This morning you would have seen our announcements of the merger between Warid Telecom and Mobilink, following the transfer of shares, THE parties intend to merge into one company. You can find more details of the agreement both in morning’s press release or on our websites and again here this afternoon.
This transaction will allow Mobilink and Warid to accelerate the availability of high speed mobile telecommunications. It will provide consumers and businesses with best in class mobile network and more value added, competitively priced set of service offerings and wider access to digital enablement, enabling the digital agenda, not only within the company, but for the governments, such as Mobile Financial Services among other things.
The combined customer base will reach 45 million. The economies of scale and more efficient cost structure of the combined businesses are expected to generate significant CAPEX (capital expenditure) and OPEX (operational expenditure) synergies to up-word of USD 500 million.
The combined revenue of both companies Per Forma with 12 months till September 2015 was USD 1.4 billion.
Combined businesses will substantially increase our market share, in terms of customer numbers, to little over 37 percent from 29 percent, making us again the largest telecommunication provider in Pakistan.
[Unintelligible] With that leadership comes with a purpose and opportunity, but with that comes a sense of responsibility.
Our ambition, in line with our responsibility, is to be consumer’s operator of choice. Integrating the two companies by getting best of both worlds and serving a larger customer base in this fixed cost business, will also help us to drive the telecom industry towards the next stage and level of evolution.
The ultimate beneficiaries of this merger, however, are our customers. Both Warid and Mobilink possess unique strengths and this agreement will go a long way in ensuring that we provide our customers with the most efficient, cost effective and technologically advanced solutions.
Mobilink’s Mobile Financial Services, MobiCash business portfolio, along with its footprints across the remotest areas of the country will be available to Warid customers upon the completion of the transaction, which is expected to complete with-in six months.
Combined two brands will become Pakistan’s leading, high-speed mobile network; we will provide enhanced network quality and capacity, to our strategic and operational consolidation of our network and it will very importantly accelerate in expansion of high-speed data to the country.
After approval, and engagement with the government and different stake holders, we will align our operating model to best practices from both businesses, integrating our customer services and having a far more efficient channel and distribution model and introducing again more technological platforms which will result in better utilization of our resources and opportunities for our customers.
We understand that this merger – and we will come to that — will raise several questions in your mind, as to how this deal will go through, how long will it take and how elements such as HR and other resources will be impacted as a result of this merger.
As mentioned earlier, transaction is expected to close with-in six months, subject to obtaining approvals from relevant regulatory authorities in Pakistan.
The merger will be rolled out in phases, where decision pertaining to management, the combined work force, commercial opportunities and brands will all be finalized as parts of this process.
Speakers went offline and last few lines of Mr. Jeffery’s briefing were not recorded.
Question Answer Session
Mr. Omar Manzoor moderated the question answer session.
Question: First question, how are you going to tackle the issue of redundant employees, and secondly what kind of investment should we expect from the joint venture?
Jeffrey Hedberg: Unfortunately, my response is going to be along the following lines, obviously until we have the appropriate approvals from relevant authorities, be that the competition commission, PTA, Security and Exchange Commission of Pakistan, the courts, its business as usual at both companies.
During this period, we will think about the strategy, we will think about planning, we will think about what are the opportunities for us in the best interest to drive these synergies. We will look into synergies from top down and bottom up synergies, but we are yet not in position to answer some other questions until we have the appropriate approvals, because network integration, franchise consolidation, what the brands will be, what are opportunities with MFS, we need to qualify and quantity this as part of the strategy and planning process.
Once we have concluded the transaction, once we – hopefully – receive the appropriate approvals from the government, then we are happy to come and answer those questions. But right now its business as usual and anything I say now could substantially change on the basis of strategy and plans that we will now start.
We didn’t know wheter there will be a deal or not, so the opportunity to do such planning today was limited. So I am not trying to be evasive, I am just saying that right now its business as usual and our primary focus now is communicating internally, externally, strategy and planning and most importantly ensuring that we get the approvals from government entities and other authorities for this transaction.
Question: Is there any legal obstacle for you to use Warid’s LTE technology, i.e. without any license and spectrum?
Jeffrey Hedberg: We obviously need to engage with the government across the different authorities that I noted earlier. Muneer can probably comment more specifically on this.
So one of opportunities I see is 2G, 3G and combined 4G LTE capability to our customers. Obviously how we deal with the spectrum will be an opportunity to engage with government but at this point in time it will be premature for me to say there are or there are not any legal hurdles, because we need to go through the process that we will do very constructively with different entities.
Question: Is Dhabi Group exiting from Pakistan?
Muneer Farooqui: That’s not the case at all. Our shareholders are still very much committed to the investments in Pakistan. You must be aware that we will be part of the new combined, much bigger entity in Pakistan. Dhabi group is going to be a partner in that entity as well.
And telecom is not the only area where Dhabi Group has invested. We have many more investments, as you might be aware of, such as Bank Alfalah, Insurance business, Wateen and others. So there’s no such thoughts of divesting or exiting from Pakistani market. We are one of the larger investors in country and we would like it to stay like that.
Question: Warid’s GSM license is going to expire next year, so in case of merger, how is Mobilink planning to retain this GSM license after its expired?
Muneer Farooqui: Warid’s GSM license will expire in 2019, so we still have time to see how to go about it.
Question: Is Mobilink buying Nayatel?
Jeffrey Hedberg: At this point in time we are very pleased with what Nayatel is doing but there are currently no discussions with Nayatel for anything.
Questions: With 45 million customers in combined company, do you fear CCP coming into play and questioning your market position?
Jeffrey Hedberg: Be clear that 45 million is the combined entity not Mobilink+Warid, which would reflect a market share, in terms of subscribers, a 37.6 percent, which is comfortably under the threshold of dominance defined of 40%.
Obviously we need to engage with CCP to demonstrate that this transaction is in best interest of customers and in best interest of accelerating the government policies both in urban as well as in rural areas. But that engagement has yet not taken place yet, and will take place over the next month.
Question: Has Warid taken franchisees on-board before going ahead with the deal?
Muneer Farooqui: Both of us the Mobilink and Warid, have taken our franchisees – who are our partners – into confidence and have told them about the matters that are going on. They are aware of it.
We are going to capitalize, once we get all the necessary approvals, we are going to capitalize on the available strength we have and the retail outlets and the franchisees are definitely of strength. So they will be evaluated on merit and [Unintelligible]
Mr. Muneer Farooqui here briefed the media about Mobilink-Warid merger in Urdu
Question: How many employees are there in Warid, and what measures have been taken to ensure their job security?
Muneer Farooqui: Warid has around 1,000 full time employees. And about security, no one is currently at risk. And like Jeffery said about Franchisees or our retail partners, we will plan while keeping the welfare of our employees provided they perform and for those who have gotten the right skill-set for our vision and business delivery demands.
So they will all be there, and they will have opportunities to work with no threat to anybody’s job at the moment.
Question: Will Warid retain its brand name after the merger?
Muneer Farooqui: For now, we haven’t decided anything on this. We are waiting for the regulatory approvals after which a strategy will be devised to work on post-merger mechanisms.
Question: Could you tell us the valuation of the deal and how much Value has been retained by Dhabi Group?
Jeffery Hedberg: This is a merger, it’s not an acquisition. There are respective businesses that are combined up to 15% of the combined value is shared by Dhabi Group.
Omar Manzoor: Thank you everyone for joining us here. That would be all for now.