Synergy for Sustainability in the Upcoming Telecommunications Revolution: The Case of a Developing Economy

Synergy for Sustainability in the Upcoming Telecommunications Revolution: The Case of a Developing Economy

Abdul Rafay (University of Management and Technology, Pakistan) and Arsala Khan (University of Management and Technology (UMT), Pakistan)
Copyright: © 2018 |Pages: 26
DOI: 10.4018/978-1-5225-5279-6.ch003

Abstract

This chapter examines the merger of two cellular companies (MOBILINK and WARID) for sustainability in the telecommunication sector of Pakistan. During 2011-2013, WARID faced the news of the possible sales of the company due to falling revenues, constant poor network quality, and lower network coverage in rural areas. In 2014, all telecom players participated in the auction for 3G/4G licenses, but WARID did not participate due to its technology neutral license (TNL). Important decisions were taken in 2014 like launching of 4G/LTE services in major cities, US$500 million investment, increase of tower sites, opening of new regional sales offices. These decisions along with presence of TNL made WARID an attractive target for merger with MOBILINK. In 2016, the formal merger was finalized for benefits like synergies in CAPEX/OPEX, fastest 4G network, network reach to rural areas, roll-out of new services like the internet of things (IoT) and mobile banking. The merger proved successful. During the first quarter of 2017, the company generated PKR 38.7 billion in revenues, up from the same period a year before.
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Prologue

In July 2016, the Amsterdam-based telecom company VimpleCom Ltd (VCL), Global Telecom Holding (GTH), together with WARID Telecom Pakistan and Abu Dhabi Group of UAE announced to merge MOBILINK and WARID, creating Pakistan’s next generation digital telecommunications provider. Earlier in November 2015, these groups agreed to combine their telecommunication businesses. Prior to this, MOBILINK and WARID had received approvals from Competition Commission of Pakistan (Appendix – I), Pakistan Telecommunication Authority (Appendix – II), Securities and Exchange Commission Pakistan, local and international creditors and State Bank of Pakistan (Technologytimes.pk, 2016; Attaa, 2016). Finally, the merger process of MOBILINK and WARID achieved a crucial milestone after the Islamabad High Court approved the amalgamation of the two companies in December 2016 (Thenews.com.pk, 2016).

On the occasion of this announcement, Jean-Yves Charlier, Chief Executive Officer of VimpelCom, said:

VimpelCom continues to make significant progress against its transformation program. This market consolidation represents a further step in our strategy to strengthen

our position in the markets in which we operate. As the VimpelCom Group focuses on an ambitious digital transformation, we are investing in revolutionizing our technology core and product portfolio. We look forward to bringing innovative new products and services to our customers in Pakistan.

Chairman of Abu Dhabi Group, His Highness Sheikh Nahayan Mabarak Al Nahayan, said:

I am very happy that we have arrived at this milestone today which marks a unique moment for the Pakistan telecom sector. It is very positive news for Pakistan’s economy. The Dhabi Group remains committed to Pakistan and its economic progress and I would like to thank all the relevant authorities for their support in closing this transaction. I am confident that together, the combined businesses will continue to deliver excellence to their customers while contributing positively to the business environment in Pakistan.

Adeel Bajwa, Chairman Board Executive Committee of WARID Telecom, expressed his gratitude:

This is a milestone in the Telecommunication history of Pakistan. Such steps will go a long way towards enhancing investor confidence in the country and the progress of Cellular Industry. We are very excited about the opportunities this affords us for better serving our customers.

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