Telenor offloads its Pakistan operation for $493m

• Telenor continues to revamp its Asian operations
• Telenor Pakistan, which has 45 million customers, has been under a strategic review for more than a year
• Now it is being sold to PTCL for just $493m
• If the deal is approved, it will cut the number of mobile operators in Pakistan to three and create a joint market leader

Following a strategic review, Telenor has agreed the sale of its operation in Pakistan to PTCL (Pakistan Telecommunication Company Ltd.) for 5.3 billion Norwegian kroner ($493m). 

The deal had been on the cards for months: Telenor had previously noted that high inflation, macroeconomic uncertainty and political unrest make Pakistan a tough market in which to operate currently, and had reported an impairment charge of 2.5bn Norwegian kroner ($235m) against the business in the second quarter of 2022, when it began its review of the operation. 

Then in September this year, state-owned PTCL announced to the Pakistan Stock Exchange (PSX) that it was ready to make a binding offer for the operation, which has about 45.2 million customers but only generated 2,600 kroner ($242m) in revenues during the first nine months of this year, down by 21% from the same period a year earlier. 

Now a deal has been struck, though the price might come as a disappointment to some: Previous reports had suggested PTCL might shell out between $500m and $700m for the operation. The capital for the deal has been arranged by Middle East digital services and telecom giant e&, which has management control over PTCL despite holding a stake of only 26%.  

Petter-Børre Furberg, head of Telenor Asia, noted: “We systematically considered all alternatives during the strategic review process and believe that, following a sale, the market will be better served by a strong local champion. Our strategy in Asia is to build number-one positions in the markets we operate, with scale as a prerequisite for value creation and profitable growth. We thank and acknowledge the commitment of the Telenor Pakistan team and partners, who will continue to serve customers well in the transition. Looking ahead, Telenor Asia will remain an active owner for the three market-leading businesses which make up our Asian portfolio.”

Hatem Dowidar, group CEO at e&, stated: “The strategic acquisition of Telenor Pakistan presents a significant opportunity for market consolidation, empowering us to invest more in creating the best next-generation network in Pakistan. This move reinforces our commitment to the progress of the country’s telecom sector, delivering added value to our customers and shareholders. In shaping a telecom legacy where innovation and connectivity merge to explore future opportunities, we aim to accelerate digital transformation to better serve our customers and community.”

The deal, which is expected to close next year, would leave Telenor Asia comprising Grameenphone in Bangladesh (55.8% ownership), True Corporation in Thailand (30.2% ownership) and CelcomDigi in Malaysia (33.1% ownership), as well as a 55% stake in Telenor Microfinance Bank in Pakistan. In recent years, Telenor has revamped its portfolio in Asia through a number of mergers and acquisitions, including the sale of its business in Myanmar, and the merger of its businesses in Thailand and Malaysia with local peers.

If the PTCL acquisition is approved by Pakistan’s regulators, it will reduce the number of infrastructure-based mobile operators in the country, which has almost 190 million mobile users, from four to three. 

PTCL already has a mobile operation, Ufone, which boasts about 25.2 million customers: A combined Ufone and Telenor Pakistan would be the equal market leader (based on current subscriber numbers) with Pakistan Mobile Communication, which is owned by international operator Veon and operates under the brand Jazz – it currently has 70.5 million mobile customers. The other main operator in Pakistan is Zong (China Mobile Pakistan), with 47.1 million customers. 

- Ray Le Maistre, Editorial Director, TelecomTV