KARACHI: Telenor Group is looking for “merger opportunities” in Pakistan, news agency Reuters quoted on Monday the CEO of the Norwegian telecom operator as saying.

“Telenor will continue to look for merger opportunities in Asia, including in Pakistan and on a regional basis,” said Sigve Brekke, CEO of Telenor Group, which runs telecom business in nine markets across Europe and Asia.

He made the comment after announcing his company’s plan to merge its telecom unit in Thailand with a local entity in an $8.6 billion deal.

There are four cellular networks in the country with a total of 187 million subscribers. Jazz is the largest network with a 38.4 per cent market share, followed by Telenor (26.4pc), Zong (22.2pc) and Ufone (12.1pc).

Four cellular firms operating in country with a total of 187 million subscribers

Speaking to Dawn, Pak-Kuwait Investment Company’s head of research Samiullah Tariq said the European company was looking for consolidation in Pakistan because the telecom market is becoming saturated here.

“It’s become a stable business now. There’s not much growth,” he said, emphasising that a possible merger will bring efficiency and bottom-line improvement to the merged entity.

“The consumer may suffer because of the reduced competition in the telecom sector. But the merged entity will have more space on its balance sheet to invest in technology and infrastructure as the 5G rollout is expected in 2022-23,” he added.

Both Jazz and Telenor are owned by foreign holding companies. As such, they don’t publish the net profit figures for their Pakistan operations.

But the latest quarterly accounts released by its holding company show the Pakistan business of Telenor Group posted a year-on-year increase of 12.9pc in operating profit for July-September. Its total revenue increased 3.2pc over the same period. The company’s subscriber base stood at 48.9m at the end of September, up 6pc from a year ago.

However, its average revenue per user (ARPU), a key performance benchmark for cellular companies, declined 10pc year-on-year in July-September.

In an interview with Dawn last year, Telenor Pakistan CEO Irfan Wahab Khan had said that raising the number of phone subscribers in Pakistan was “challenging” because of high and discriminatory tax rates. He had also claimed that the official teledensity percentage — which was 79pc at that time and now hovers around 85pc — was “misleading” because many phone users carried multiple SIMs.

He told Dawn that a market like Pakistan should not have more than three cellular networks. Ensuring geographical coverage consumed resources and the resulting intense competition reduced profitability, he said.

Ufone, which is the smallest telecom player, is also looking for a merger with another telecom operator, according to reports in the financial press. Should Telenor merge its operations with Ufone, the combined entity will have almost as many subscribers as the current market leader Jazz.

The telecom industry underwent the first round of consolidation about five years ago when the shareholders of Warid signed a share-swap agreement with Mobilink (now Jazz) for a 15pc stake in the merged entity.

Earlier this month, MCB Bank Ltd showed interest in purchasing the entire 55pc stake in Telenor Microfinance Bank, which the Telenor Group currently owns in the Pakistani micro-lender.

Published in Dawn, November 23rd, 2021