Mobilink has moved to cement its position as Pakistan’s largest mobile operator by announcing on Thursday that it has agreed to merge with smaller player Warid Telecom.
Under the terms of the deal, Mobilink will acquire 100% of Warid’s shares, in return for Warid owner the Dhabi Group buying 15% of Mobilink’s shares, the companies explained, without placing a value on the transaction. Warid will then be merged into Mobilink.
Mobilink, which is owned by Vimpelcom via its Global Telecom Holding unit, leads the Pakistan mobile market with 35.2 million customers at the end of September, giving it a 29% share, according to statistics from the Pakistan Telecommunication Authority (PTA).
Warid is the smallest of the country’s five mobile operators with 10.3 million customers and an 8.5% market share.
Thus, together the operators control 37.6% of the market
The operators’ combined revenue for the 12 months to September was US$1.4 billion, their parent companies said in the merger announcement. They expect to create capex and opex synergies worth around US$500 million from the deal.
"Both parties bring their unique strengths to this merger," said Dhabi Group chairman Nahyan Mubarak Al Nahyan. "Warid, with its strong postpaid base and high quality 4G/LTE network will complement Mobilink’s position in the market," he said.
Mobilink CEO Jeffrey Hedberg will serve as chief executive of the merged entity, and its finance chief Andrew Kemp will also retain his role.
The firm’s board of directors will have seven members, compr ising six nominated by Vimpelcom and Global Telecom Holding and one nominated by the Dhabi Group.
For Vimpelcom, Thursday’s announcement is the latest in a series that will reshape its business.
"This transaction follows a number of strategic milestones for the company, including our recent joint venture announcement with Wind and 3 Italia in Italy and the agreement to sell our operations in Zimbabwe," said company CEO Jean-Yves Charlier.
"This is yet another important step in our journey to continue delivering on our strategy to transform Vimpelcom and improve our competitive position in our operating markets," he said.
The transaction is expected to close in the next six months, subject to regulatory approvals, and the merger is due to take place within the following six months.
The deal includes put and call options that could enable Vimpelcom to take control of Dhabi Group’s stake in the merged entity after a four-year lock-in period.
