Everything You Need to Know about Mobilink-Warid Merger!

Yesterday Mobilink and Warid announced that they have agreed to merge both companies to become one company within few months from today. CEOs of both companies held a press conference in Lahore, where they explained to the media about the ins and outs of the entire deal.

Here we have compiled all the information for our readers at one place, so they get to know about all the available details about the deal:

Mobilink-Warid Merger:

• Phase 1
  • Mobilink will acquire 100% shares of Warid.
  • Dhabi Group will get 15% shares of Mobilink.
  • There’s no cash transaction involved, just the shares will be swapped
  • This process may take up to six months from yesterday and is subject to regulatory approvals.
  • Till this phase is completed, both companies will continue to work separately as they were.
  • During phase 1, planning and strategy for the merged company will be devised. All parties will get involved to lay down a plan on how to merge the companies. We are assuming that majority of planing and strategy work has already been done, but it won’t get public until this phase 1 completed.
• Phase 2
  • In phase two, after the completion of phase 1, Warid and Mobilink will merge into one company.
  • This will take another six months to close and will require regulatory approvals.
  • After this, there will be one company as an outcome.
  • At this point, shifting of offices, consolidation of franchisees, retailers, and various organizational functions and employees will occur.
  • This single merged company may carry the name of Mobilink or may adopt any new brand name.
  • This single company will have single support operations, single sales and distribution network, one single PR agency and so on.
• Phase 3
  • After a lock-in period of 4 years, Dhabi Group will be allowed to sell its 15% stakes at fair market value.
  • VimpelCom will have first rights to these 15% shares, however, they may offer Dhabi Group to sell these shares to anyone else.
• Governance:
  • The Board of the merged company will be composed of 7 directors of which 6 will be nominated by VimpelCom; while Dhabi Group can appoint 1 director.
  • Resolutions of the Board, in general, shall be decided by majority vote, except for certain limited reserved matters.
  • Jeffrey Hedberg will be the CEO of merged company.
  • Andrew Kemp will be the CFO of merged company.
• Impact on Employees:
  • It is now clear that certain, but yet unknown, number of employees from both companies will be removed from the merged company. Management said that employees, franchises, retailers and all other resources will be retained on need, performance, and skill-set basis.
• Value Creation through Merger
  • USD 115 million annual run-rate cost synergies, 90% expected by third year post-closing; in excess of USD 500 million NPV cost synergies expected, net of integration costs.
  • Distributions projected within the first two years post-closing.
  • Leverage: Mobilink 1.8x Net debt/EBITDA at signing.
  • Pro forma revenue and EBITDA margin of USD 1.4 billion and above 40% respectively.
• Impact on Customers:
  • Current Warid and Current Mobilink customers will start using one single network, one helpline and same services.
  • Customers of merged company will be offered compound services of both Warid and Mobilink, including 2G, 3G, 4G, MobiCash.
  • Customers will be allowed to retain their current numbers

Merged company in numbers:

• Combined footprint and customer base of 45 million with 37.6% market share (w.r.t Sep 2015 data)
• Total number of Towers: 13,000
  • Current Mobilink Towers: 8,000
  • Current Warid Towers: 5,000
  • Towers to be decommissioned: 3,000 to 4,000
  • Towers after decommissioning: 9,000 to 10,000
  • 3G Towers: 3,600
  • 4G LTE Towers: 1,000
• Financials:
  • Current Mobilink Revenues for 12 Months till Sep 2015: USD 1 Billion
  • Current Warid Revenues for 12 Months till Sep 2015: USD 357 Million
  • pro forma revenues for 12 months till Sep 2015: 1.36 billion
  • Net Debt Position as of Sep 2015:
    • Mobilink: USD 380 Million
    • Warid: USD 470 Million
    • Pro Forma: USD 850 Million
• Enlarged and improved mobile network with over 80% population coverage (2G)
• Largest network, with almost 5,000 3G and 4G/LTE sites

For further reading:

• Official: Mobilink and Warid Merge into One Company
• Transcript of Press Conference by Mobilink-Warid CEOs on Merger

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