Pakistan Telecommunication Company Limited (PTCL) on Thursday announced that it had signed an agreement with Telenor to acquire a 100 per cent stake in the company on a cash free, debt free basis.

Ownership of the country’s second-largest cellular service provider will soon change hands, as Telenor Pakistan had signalled leaving the country since last year amid a growing cost of doing business.

The sale is part of Telenor’s strategy to build scale and market-leading players in Asia, as presented at the 2022 Capital Markets Day, Telenor said in a separate press statement today. It concludes the strategic review of the telco operations in Pakistan, which was announced in July 2022.

The transaction values Telenor Pakistan at NOK 5.3 billion ($493m) on a cash-and-debt-free basis. This includes repayment of intercompany loans of NOK 3.5 billion and reduced interest-bearing liabilities of NOK 1.8bn, including leases.

Petter-Børre Furberg, head of Telenor Asia, added: “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.

“Looking ahead, Telenor Asia will remain an active owner for the three market-leading businesses which make-up our Asian portfolio.”

PTCL’s major assets include Ufone, a mobile operator in Pakistan with over 20 million customers.

According to the PTCL, “The acquisition brings together the strengths and expertise of both PTCL Group and Telenor Pakistan, creating synergies that will drive innovation and bolster our market, allowing us to reach a broader customer base and accelerate digital transformation journey.”

Moreover, the chief executive of PTCL, Hatem Bamatraf, commended the agreement and expressed his confidence in acquisition, stating it will enhance service and delivery to their customer base with “better coverage, seamless data experience, massive reach and a wide range of products and services for customers.”

Meanwhile, Hatem Dowidar, chief executive of the E&K group, highlighted that this action provided an important opportunity for market consolidation, and allows for investment in next-generation network in the country, cementing their position to explore future opportunities.

Mohammed Sohail, chief executive of Topline Securities said on X that this acquisition is “one of the biggest acquisition deals in Pakistan despite its economic challenges”.

Telenor had been signalling its intentions to exit Pakistan. In November 2022, Bloomberg reported that the Norwegian company was searching for a buyer to sell its Pakistani operations to.

Meanwhile, the firm said it will continue its business as usual and focus on delivering services to its 45m customers. The agreement is subject to regulatory approvals and other customary terms and conditions. The transaction is expected to be completed during 2024.

The statement further added that the Etisalat-owned company was “actively working towards a smooth transition process to ensure minimal disruption for employees, customers, and other stakeholders”.