PTCL acquires Telenor Pakistan for $1.2 billion

Pakistan Telecommunication Company Limited (PTCL) has finalized an agreement to acquire all shares of Telenor Pakistan (Private) Limited (TPL) for a total enterprise value of Rs108 billion (about $380 million). This announcement was made in PTCL's recent communication to the Pakistan Stock Exchange. The transaction, which involves PTCL buying TPL on a cash-free, debt-free basis, will be financed through external borrowing. Telenor Pakistan, a key mobile operator with 45 million subscribers, has reported a revenue of Rs112 billion and an EBITDA margin of 43% in its latest financial year ending September 2023. This acquisition is expected to consolidate the market and boost the long-term prospects of the telecom sector. PTCL, a leading player in Pakistan's information and communication technology sector with a market value of Rs 49 billion ($173 million), boasts the country’s largest fixed-line network. The company offers a range of services including voice and high-speed broadband internet. It fully owns Ufone and U Microfinance Bank and is predominantly owned by the Government of Pakistan and Etisalat of UAE. As per the analysis by Topline Pakistan Research, PTCL plans to fund this acquisition through external debt, which the current Telenor Pakistan shareholders will receive. The research suggests that PTCL may incur an annual interest of Rs19 billion if it borrows the equivalent of $380 million at an 18% rate. This cost is significantly lower than Telenor's last year's EBITDA of Rs112 billion. The merger of PTCL, Ufone, and Telenor is expected to create operational efficiencies and shared infrastructure benefits. This contrasts with the 2015 Mobilink-Warid deal, where Mobilink acquired all shares of Warid Telecom, resulting in Warid’s owners receiving a 15% stake in the merged entity, without any cash transaction. Telenor Group highlighted that this sale aligns with its strategy to establish and lead market positions in Asia, as outlined in its 2022 Capital Markets Day presentation. This concludes Telenor's strategic review of its operations in Pakistan, which began in July 2022.