Etisalat funding doubts stall PTCL merger plan

The competition watchdog has questioned PTCL’s ability to finance the planned Telenor-Pakistan merger and sought binding commitments on post-merger investments.

According to officials familiar with the matter, the CCP has asked PTCL to confirm whether Etisalat, the UAE-based parent company operating under the brand “e&,” plans to provide equity support to cover losses faced by PTCL and its mobile subsidiary, Ufone. The Commission noted that PTCL’s responses so far have been generic and lacked concrete data, raising doubts about the company’s preparedness for a deal of this scale.

Key Takeaways

• CP has asked PTCL to clarify if Etisalat (“e&”) will inject equity to support the merger with Telenor Pakistan.
• PTCL has failed to provide concrete details on investment plans, funding sources, and 5G auction participation.
• Both PTCL and Ufone are incurring heavy losses, raising doubts about post-merger profitability.
• CCP flagged vague financial disclosures, including revenues under “Other Core Products” and lack of clarity in IDD, colocation, and bandwidth charges.
• Regulators warn the merger could face delays or conditions unless PTCL provides binding commitments and transparent reporting.

The Pakistan Telecommunication Company Limited (PTCL) has come under scrutiny from the Competition Commission of Pakistan (CCP) for failing to provide detailed information on its financial viability, investment plans, and sources of funding for the proposed merger with Telenor Pakistan. The regulator has raised concerns over whether the company, already facing sustained losses, can realistically sustain post-merger commitments without external equity injection.

Doubt on PTCL Business Plan for Merged Entity

The regulator has specifically demanded clarity on PTCL’s business plan for the merged entity, including capital expenditure commitments and sources of funds for future investment.

The Commission further asked whether PTCL is willing to provide a binding commitment to undertake the planned investments, including participation in Pakistan’s anticipated 5G spectrum auction. Without clear funding commitments, regulators argue, the merger risks leaving the sector in a weaker financial position rather than strengthening competition.

PTCL and Ufone have both reported consistent losses in recent years, prompting the CCP to question how the company intends to generate profit following the merger. The Commission asked whether PTCL’s strategy relies on bank loans, parent-company funding, or undisclosed sources of capital. Industry analysts note that while telecom consolidation has become common globally, successful deals require strong financial backing and transparent post-merger strategies.

Beyond funding concerns, the CCP has also raised issues about PTCL’s corporate practices and reporting standards. Specifically, the regulator pointed to inadequate details in information provided on outgoing international direct dialling (IDD). PTCL’s Shady Investment Pitch Raises Eyebrows

PTCL was directed to submit exact traffic volumes, per-minute rates, and comparisons of charges applied to Ufone against other major operators such as Jazz, Zong, and Telenor for the period 2022 to 2024. The lack of clarity in tariff structures and revenue disclosures was flagged as a potential transparency gap.

The Commission also objected to vague entries in PTCL’s financial reports, where categories such as “Other Core Products” and “Other Retail/Wholesale” recorded significant revenues without any supporting volume or rate data. Similarly, details relating to party transactions, transfer pricing, and access agreements were either missing or incomplete, raising questions about how PTCL accounts for revenue from related entities.

The CCP also sought precise figures on colocation revenues, where PTCL leases infrastructure to operators. The company was found to have disclosed only average per-site rates for Ufone without providing the same level of detail for competing firms, undermining comparability. The regulator asked for site-specific data covering 2022 to 2024, including the terms and conditions applied to each client.

In the case of IP bandwidth services, PTCL was again faulted for providing per-Mbps rates exclusively for Ufone while only submitting average rates for competitors. Similarly, in domestic private leased circuit (DPLC) services, PTCL was found to charge discounted rates to Ufone based on volume and location, but no clear methodology was provided for allocating capital costs between Ufone and third parties. The regulator flagged these discrepancies as undermining transparency and fairness in the telecom market.

The CCP’s intervention underscores the growing regulatory scrutiny surrounding telecom mergers in Pakistan, where past deals have faced delays over competition and transparency concerns. The merger between PTCL and Telenor Pakistan, if approved, would reshape the industry by creating one of the largest mobile operators in the country, rivaling Jazz and Zong. However, the lack of financial clarity and incomplete disclosures threaten to derail the process unless PTCL provides binding commitments and transparent reporting.

Industry observers note that Etisalat, which controls a 26% stake in PTCL, has historically faced challenges in aligning its Pakistani operations with global strategy. Past negotiations on revenue transfers and investment flows have also been contentious, and the CCP’s latest queries suggest regulators are determined not to approve the merger without guarantees of long-term viability.

As the telecom sector braces for the introduction of 5G and increasing capital demands, the PTCL-Telenor merger is being closely watched as a test case for Pakistan’s regulatory regime. Unless PTCL addresses the CCP’s concerns with concrete data, experts warn, the deal could face prolonged delays or additional conditions.

In its closing communication, the CCP stressed that PTCL must not only justify its business plan but also prove how it intends to finance expansion in an already strained market. Without binding commitments on equity, revenue clarity, and competitive neutrality, regulators argue, the merger risks undermining rather than enhancing Pakistan’s telecom landscape.