Competition Commission of Pakistan on Monday approved the proposed merger of Mobilink and Warid in a decision that is hailed by the industry. While CCP didn’t object on the merger itself but imposed certain conditions by binding the merged company to comply with such conditions to carry out the merger process.
In its detailed decision, a copy of which is available with ProPakistani and is produced at the end of this story, CCP said that it is approving the merger even after considering competitors’ concerns, the countervailing factors and the efficiencies.
CCP bench hearing the matter comprised of Vadiyya Khalil, the Chairperson, Dr. Shahzad Ansar, Member Office of Fair Trade & Advocacy, and Ikram Ul Haque Qureshi, Member Cartels & Trade Abuse and Legal.
Merger case was presented by Mobilink, VimpelCom and Warid Telecom. Telenor Pakistan and Telenor ASA were also included in the hearing after their own request. CCP also called PTA in the hearings as a regulatory body for the telecom sector.
Conditions that CCP imposed, along with approval, are as following:
At present, the total spectrum allocated to five mobile operators in the country is 108 MHz, out of which the merged company will have a combined spectrum of 37.2 MHz (combined spectrum of Mobilink and Warid) after the merger, which would be 34.44% of total spectrum that’s allocated to telcos.
Apart from the overall size of the spectrum allocated to an operator, each frequency band carries unique properties in terms of its spectral efficiency and propagation properties on wireless mediums, making certain frequencies more attractive than others.
CCP said that merged company will hold the largest portion of the 900 MHz frequency band i.e. 12.4 MHz, which can be used for both GSM (2G/3G) and LTE networks. Not to mention, no further allocation of spectrum is possible in 900MHz band.
Merged company will also have 14.8MHz in 1800MHz band — that also allows for LTE deployments — that accounts for 21.49% of total spectrum allocated in this band.
Then in 2100MHz band, the merged company will have 10MHz of spectrum that’s usable for 3G.
With respect to spectrum shares of merged company, the Commission said that it is necessary to remedy the disproportionate allocation.
In this regards, PTA is asked to develop a spectrum sharing framework, after which in a case when new operator — that wants to operate in the country — comes in and there’s no additional spectrum available then merged company will be allowed to negotiate the terms with new entrant to share the spectrum with it.
PTA is asked to finalize the spectrum sharing framework with-in six months.
Merged company, however, is restricted from entering into any spectrum sharing or trading arrangements with Telenor Pakistan due to structural link between Telenor ASA and VimpelCom unless approved by the PTA and the
Competition Commission of Pakistan.
Wholesale Access to MVNOs
Competition Commission of Pakistan recommended PTA to carry out a reassessment of its current MVNO framework in consultation with all stakeholders including mobile operators and to take reasonable steps to encourage and facilitate MVNO entry in Pakistan.
Commission recommended PTA that it may consider imposing a wholesale access obligation on all mobile operators currently operating in Pakistan on a non-discriminatory basis.
Once PTA is able to develop this new framework on MVNOs, merged company is binded to provide wholesale access rights to MVNOs, including but not limited to network access, call origination, call termination, international roaming for voice/SMS and data services, and access to portability database.
Such access to wholesale call origination shall be granted on fair and reasonable commercial terms and conditions.
Competition Commission of Pakistan, in its decision, binded merged company to continue providing interconnection on the same terms to all other mobile network operators in accordance with the Reference Interconnection Offer
(RIO) approved by PTA.
Competition Commission offered all mobile operators to approach the commission in case of any anti-competitive behavior.
Ongoing Infrastructure Sharing Agreements between Warid/Mobilink and other mobile companies in cases where merged company will plan to discontinue its sites should be re-negotiated.
Not to mention, almost 4,000 sites are supposed to be decommissions when Mobilink and Warid will be merged into one company.
In such renegotiation, merged company will do one of following:
- If there’s only one tenant on a shared-site, merged company will allow such guest operator to buy all fixtures, tower or any other equipment on site on fair-value and reasonable commercial terms and conditions with-in a period of 30 days from initial notice
- If there is more than one tenant on a Site, then merged company will auction all fixtures, tower or any other equipment on such Sites subject to a fair value reserve price within the period of thirty (30) days from initial notice. Upon successful sale, the acquiring mobile company will continue to host the other guests on the same terms and conditions.
- If parties cannot agree on the fair value then price would be determined by an independent valuer mutually agreed between the parties who shall carry out the valuation within fifteen (15) days from reference.
- If the sale is not completed within the thirty (30) day period of reference then guest operator(s) would vacate the Site
- However, for a period of five months from the date of Order, merged company will not request an mobile operator that is a guest on its Sites to leave the site without granting one of the two options noted
Join Control / Cross Holding
Just because VimpelCom is partly owned by Telenor ASA, and that Telenor Pakistan is fully owned by Telenor ASA, while Mobilink is fully owned arm of VimpelCom, CCP said that merger must not raise any cross-holding or joint control issues in local market.
Commission said that merging parties will appoint an independent third-party-reviewer (TPR) to ensure compliance on current merging companies’ cross-holding with Telenor Pakistan and to ensure the compliance of CCP’s earlier decisions at the time when VimpelCom had acquired Orascom.
Commission, in its decision, said that this term will cease in case Telenor ASA sells its shares in VimpelCom, which it has intended lately.
You can download CCP’s detailed decision on merger by clicking this link (PDF File – 7MB)