CCP Would Only Allow Conditional PTCL-Telenor Merger Amid Monopolistic Concerns

The Competition Commission of Pakistan (CCP) is all set to deliver its decision on Pakistan Telecommunication Company Limited’s (PTCL) proposed acquisition of Telenor Pakistan Pvt Ltd and Orion Towers Pvt Ltd. The impending verdict follows a comprehensive Phase-II review, focusing on potential competition concerns and market dominance issues.

The Member of the Office of Fair Trade, Cartels & Office of International Affairs at CCP, Salman Amin during a media talk highlighted the meticulous nature of the Phase-II review. He noted that PTCL has provided substantial information, however, some details are still pending. Amin highlighted the uniqueness of this case, distinguishing it from previous mergers like that of Jazz and Warid, due to its scale and potential market impact.

The CCP’s preliminary findings suggest that the merger could significantly reduce competition in the telecom sector, potentially leading to higher prices and fewer choices for consumers. This concern stems from PTCL’s existing status as a Significant Market Power Operator in various segments, including Wholesale Domestic Leased Lines and Retail Long-Distance International Fixed-Line Telecommunication.

Potential Conditions to Mitigate Competition Concerns

To address these issues, the CCP is considering imposing specific conditions on the merger. These include,

Infrastructure Sharing: This condition mandates the acquiring company to share infrastructure with other telcos including Jazz & Zong, to prevent monopolistic control and promote fair competition.

Spectrum Sharing: Under this condition, PTCL will have to allow access to its spectrum resources to competitors, ensuring a level playing field in service provision.

Prevention of Abuse of Dominance: Implementing strict regulations to monitor and prevent any potential abuse of the dominant market position that the acquired company might hold.

These measures aim to maintain a competitive landscape, promoting innovation and protecting consumer interests.

Implications for 5G Rollout

Industry experts have raised concerns that delays in the CCP’s decision could impact Pakistan’s 5G launch timeline, initially targeted for April 2025. Ongoing litigation over spectrum allocation and the uncertainty surrounding the merger pose significant challenges to meeting this deadline.

Comparative Insights from International Markets

Similar mergers in the global telecommunications industry have faced scrutiny from regulatory bodies. For instance, the proposed £18 billion merger between Vodafone UK and Three raised concerns with the UK’s Competition and Markets Authority (CMA) about potential price increases for consumers. To alleviate these concerns, Vodafone and Virgin Media O2 extended their network-sharing agreement, demonstrating a commitment to maintaining competitive market conditions.

Our Opinion

The CCP’s vigilant approach to the PTCL-Telenor merger highlights the importance of preserving competitive markets in Pakistan’s telecom sector. The acquisition can lead to efficiencies and enhanced services, but it is imperative to implement safeguards that prevent market dominance and protect consumer interests. The proposed conditions on infrastructure and spectrum sharing, alongside strict measures to prevent dominance abuse, are important steps to safeguard competition and protect consumers. Ensuring a balanced market will encourage innovation and keep prices in check. Therefore, a timely and well-considered decision from the CCP is essential, not just for market stability but also to prevent delays in critical projects like Pakistan’s 5G rollout.

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