ISLAMABAD, March 17: The Competition Commission of Pakistan (CCP) has granted conditional approval to a cross border acquisition of Wind Telecom by VimpelCom Ltd. which is the parent company of Telenor and Mobilink.
The CCP has granted the approval after undertaking the second phase review of the transaction to address the competition concerns of the international merger in Pakistan.
The complicated case was submitted to the CCP by VimpelCom regarding the proposed acquisition of Wind Telecom, an Italian private company, which holds around 51.7 per cent shares in Orascom Telecom Holdings (OTH), an Egyptian company.
Orascom has 100 per cent owned subsidiary in Pakistan, that is Pakistan Mobile Communications Limited (Mobilink) and various other subsidiaries operating in telecommunications and related sectors.
The CCP has observed that the acquisition of Wind Telecom by VimpleCom will result in indirect change of control of OTH and its subsidiaries in Pakistan, besides Telenor (Norway) will have 31.7 per cent equity shares and 25 per cent voting shares in VimpleCom after the transaction gets consummated.
The transaction involves an amalgamation of two leading international telecommunication groups, VimpelCom and Wind Telecom, which shall create the world’s sixth largest mobile telecommunication carrier measured by the number of subscribers.
The CCP has observed that the merger can result in joint dominance or collective dominance and tacit collusion, as the competitors are able to coordinate their commercial conduct including prices, output, innovation etc. to beat the remaining players in the market.
The presence of Telenor (Norway) in the board of VimpelCom raises the potential for coordination (tacit collusion) between Mobilink and Telenor Pakistan.
CCP Member Dr Joseph Wilson issued the conditional approval directing that directors or other representatives of the Telenor group, would not be eligible to serve on the board of directors of PMCL (Mobilink) or any of its subsidiaries currently operating in Pakistan, so long as Telenor operates a subsidiary that is in competition with Orascom Telecom and/or PMCL in Pakistan.