PTA’s NOC for Mobilink-Warid Merger Was Unjustified: AGP

The Auditor General of Pakistan (AGP) has termed the grant of Non-Objectionable Certificate (NoC) for the merger of Mobilink and Warid as unjustified.

The audit report, on the accounts of Telecommunication Sector for Audit Year 2017-18 – a copy of the report is available with ProPakistani – recommended that the matter should be investigated for fact-finding and responsibility should be fixed on those responsible for granting the NOC in violation of the provisions of the law.

According to Rule 11 of Telecommunications Rules 2000, the granted cellular licenses shall be personal to the licensee and shall not be assigned, sub-licensed to or held on trust for any person, without the prior written consent of the Authority, noted the AGP audit.

It said that Rule 11 (4) stipulates that a permission given by the Authority under sub-rule (3) shall include the requirement that the licensee shall take all necessary actions to ensure the continuous and uninterrupted use of that part of the licensee’s licensed telecommunication system being sold, pledged, mortgaged or charged.

Section 5 (2) (a) of the Pakistan Telecommunication (Re-organization) Act, 1996 further states that the Authority shall grant and renew licenses for any telecommunication system and any telecommunication service on payment of such fees as it may, from time to time, specify.

It was observed that Pakistan Telecommunication Authority (PTA) received notices on 15th December, 2015 from M/s Pakistan Mobile Communications Limited (PMCL) and Warid Telecom for the change in substantial ownership interest and merger of both companies. Resultantly, PTA issued a NOC on 23rd May, 2016.

When contacted, a Jazz Spokesperson shared with us:

Jazz has been the market leader in the Pakistan Telecommunications’ market for a very long time. We always endeavour to provide the best customer experience to our millions of customers.

Over the years, Jazz has invested billions of rupees in Pakistan by upgrading our networks with state of the art technologies and providing innovative services to our valued customers. The merger with Warid, in 2016, was a big step in that journey.

We are not aware of the Auditor General of Pakistan’s advice that is being referred to, but can assure you that the appropriate authorities have accorded the requisite approvals and the merger was duly sanctioned by the Islamabad High Court.

Irregularities Observed by AGP

PTA management allowed M/s Warid for the provision of 4G/LTE services without having a license and participation in NGMS auction. At the time of the merger, under the heading “Financial Analysis”, PTA mentioned that the merger of PMCL and Warid would result in the availability of 4G/LTE service to approximately 37 million subscribers of Mobilink who previously did not have access to 4G/LTE. AGP audit said that this was an undue favor to PMCL.

PTA allowed the merger of both companies but the licenses were not merged. The AGP said that through this, PMCL was enjoying two licenses and spectrums without paying any additional cost/fee and no commitment from the merged companies was obtained for the renewal of Warid’s license after its expiry in 2019 which has deprived the government of its renewal fee.

The record further revealed that M/s CMPAK (Zong) launched a complaint vide letter dated 16th March, 2017 by highlighting various aspects of the merger like the quality of service; re-farming of a spectrum and post-merger effects. It was stated that M/s PMCL was violating S.10 (1) of Competition Act and clause 3.9 of competition guidelines and indulging in deceptive marketing practices.

Instead of addressing the complaint, PTA responded that PMCL could advertise for any service permissible under its license and PTA was vigilant about its responsibilities.

The AGP was of the view that granting NOC for the merger of Mobilink and Warid was an undue favor to the referred telecom operators and was tantamount to a scanty role of the Authority as a regulator of the telecom industry in Pakistan.

The audit report said that the matter was reported to PAO and management from July to September 2017. However, the reply was not acceptable as the permission was granted to PMCL for allowing LTE services without paying any fee and the merger was against the provisions of the Act.

The DAC, in its meeting held in December 2017, pended the para and directed PTA to explain its position on this technical issue.

  • The national exchequer should not bear loss in this merger. If PMCL has to pay fee for 4G/LTE it should be paid. PTA should not sleep in matters like these.

  • This merger has revamped the telco industry in Pakistan and have positive and negative implications; of a formidable magnitude. Now, merger took place and can’t be undone. Clear policy should be there to avoid such anomalies in future. Its worthy to mention that approval wasn’t only granted by PTA but CCP and SECP as well.

  • Not one Pakistani owned and operated telecom carrier of any size. Sad state of affairs. Look at India with Reliance owned by Ambani gives shivers down the sounds of foreign owned telcos like Vodafone and Airtel

    Orascom group used the funds from Monilink profits to build its Egyptian telecom empire but can’t pay small fees in comparison to Pakistani Exchequer in return for huge huge revenues and profits it made.

    Under new pti leadership one would hope this party and free loading by foreigners is over. And local companies get a chance to survive as well as maybe compete one day with global telecom giants.

    Even superpower America is talking about America First, Make America Great Again and China Global Belt Road Projects. Whereas Pakistanis have sold all national assets like ptcl and our prized 4G spectrums at dirt cheap rates.

    • 4G spectrum at dirt cheap rates? In which world you live my friend? 3G/4G spectrum prices in Pakistan were ridiculously high when compare to average ARPU.
      For example Telenor is Pakistan’s second largest Telecom Network and their ARPU in Pakistan is lowest among all Markets where they are operating. Even lower than Bangladesh. So what you expect from them? A 4G speed like Norway or Sweden?

      • Zafar you are talking crap now. Cut it out. You aren’t even reading what I wrote. WHY SHOULD FOREIGNORS WITHOUT ANY VESTED INTEREST EXCEPT FOR PROFIT OWN ALL THE PRIZED ASSETS IN PAKISTAN.
        If Pakitsanis owned the top prized assets the profits would be spent in Pakistan increasing the standard of living and ARPUs. This is why Chinese are so far ahead. Local giants like China Mobile, China Telecom, Alibaba, Tencent, Yoku and many many others provide jobs to locals and profits are reinvested locally.
        Also INDIA Is lowest ARPUs also. Just see Reliance Jio. But investment is over $37bn USD more than ALL of the telcos in Pakistan put together. It is this way because Mr. Ambani has vested interest in building Reliance JIO in India to be largest telco first before building subsidiaries everywhere else in the world. Pakistan must come first. Pakistan Zindabad.

  • Aik aor bat b ha jo kam log janty hein , Jazz ko 10 Mhz 4G ka jo license dia gea ha us pay wo upcoming technology b launch kr sakty hein jesy k 5G , is bary mein propakistani pay aamir bhai ny article b likha tha mujhy topic yad nhi ab , agr comment read kr rahy hein to reference say reply kr dein aamir ataa bhai

    • Every license is Technology neutral now. Even Ufone can launch 4G and 5G on their 2100 MHz spectrum by shutting down 3G

  • what a load of cr@p… do you even have a local player in the market? even PTCL is run by the arabs and they have sucked Pakistani consumer dry by their ever increasing rates and poor service….. I think they should fine mobilink and other telecom operators due to their inefficiency to launch 3g or 4g services outside big urban areas instead of talking this non sense…

  • Wait a sec, so the government wants to double-dip?

    PMCL (Mobilink) paid for their spectrum licences, and Warid paid theirs when it came to their GSM spectrum. Warid re-farmed their 1800MHz spectrum to use for LTE, and when they merged with Mobilink, their licence came under ownership of the combined entity. What AGP is saying is even though 2 companies have paid licence fees, they should be consolidated into one licence because they merged?

    No wonder nobody wants to invest in Pakistan…

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