VimpelCom is combining its Pakistani unit Mobilink with rival operator Warid Telecom in a deal marks Pakistan’s first merger.
The resulting entity will have a combined 45 million customers, and will “accelerate the availability of high-speed mobile telecommunications” according to a statement issued by the partners. VimpelCom added that tariffs would be reduced while services such as mobile banking would be expanded.
Warid’s owners the Dhabi Group will take a 15% holding in Mobilink, with VimpelCom’s unit taking over 100% of Warid’s shares in exchange for this. As long as approvals are granted, the deal is likely to close within 6 months.
VimpelCom CEO Jean-Yves Charlier said that the merger “follows a number of strategic milestones for the company, including our recent…agreement to sell our operations in Zimbabwe. 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.”
The combined unit’s board will be 7-strong, with 6 of the directors appointed by VimpelCom and the final one by Dhabi Group shareholders. Mobilink CEO Jeffrey Hedberg will retain his title at the new operator.
Various firms have attempted to acquire Warid in the past; Etisalat’s PTCL bid for the operator in December 2013 but dropped the offer after it failed to inspire rival bids from the market’s other operators, including VimpelCom. Pakistan Telecom dropped out of negotiations in March 2014 following disputes over the unit’s price.
VimpelCom’s customer base fell year-on-year to 196 million in the third quarter of 2015, largely due to regulation in Pakistan implemented in the second quarter which required unverified SIMs to be blocked. If this had not come into effect, the group’s customer base would have grown by 4.3 million.
Pakistan’s telecom industry has been in dire straits for the past year with direct foreign investment plummeting 72%. Mobile revenue additionally fell by 1.8%.