ISLAMABAD: The International Finance Corporation (IFC) board has approved $400 million in financing for PTCL Group’s purchase of Telenor Pakistan.

The decision follows Pakistan Telecommunication Company Ltd’s (PTCL) signing of a Share Purchase Agreement (SPA) with Telenor Pakistan to acquire a 100 per cent stake in the company on a cash-free, debt-free basis.

As the takeover of Telenor Pakistan by the PTCL is in progress, the financing agreements with IFC will be completed by July 31.

While the UAE-owned company e&, formerly Etisalat, had management control of the PTCL, sources in the PTCL revealed that the IFC would provide the financing to the Government of Pakistan, which is still the largest shareholder of the PTCL.

PTCL’s management is with ‘e&’, which has 26pc of the shares. The largest shareholding of 62pc is with the Government of Pakistan and the remaining 12pc has been floated through the PSX.

However, the financing details will be made public when the loan will be materialised in July.

Since PTCL was a listed company, the IFC decision was also informed to the Pakistan Stock Exchange Limited (PSX) under the rules.

The PTCL has informed the PSX that in December 2023, after approval by the PTCL board of directors, the company entered into an SPA with the shareholders of Telenor Pakistan (Pvt) Ltd for the acquisition of its 100pc shares in Pakistan at Rs108bn on a cash-free and debt-free basis.

PTCL had approached the IFC for financing to materialise the deal.

The acquisition of Telenor Pakistan by PTCL Group is subject to necessary regulatory approvals, including the formal clearance by the Competition Commission of Pakistan (CCP).

Currently, there are four players in the telecom sector led by Jazz, Telenor, Zong and Ufone, while Ufone is a subsidiary of the PTCL; after the intended acquisition of Telenor Pakistan, both Ufone and Telenor will be merged to become equally as large as Jazz.

The competitors have raised concerns to the CCP over the acquisition of Telenor Pakistan by the PTCL.

The acquisition of Telenor by the PTCL will be one of the largest mergers in Pakistan’s telecom sector, as the joint company of Ufoneand Telenor Pakistan will bring their subscriber base close to that of Jazz, the largest telecom in the country.

Published in Dawn, April 10th, 2024