The Competition Commission of Pakistan (CCP) is encountering significant hurdles in its review of the proposed merger between Pakistan Telecommunication Company Limited (PTCL) and Telenor Pakistan, primarily due to a lack of financial transparency from PTCL.

The issue was highlighted in a written response by Finance and Revenue Minister Senator Muhammad Aurangzeb to the National Assembly, following queries raised by MNA Syed Rafiullah.

Merger Application and Competition Concerns
The Minister confirmed that PTCL has submitted a pre-merger application to acquire 100% shareholding of Telenor Pakistan, triggering the CCP’s review process under the Competition Act, 2010.

The CCP has completed its Phase I review and identified potential risks of a substantial lessening of competition in the telecom sector. As the review moves into Phase II, the commission is facing challenges in assessing market dominance and increased concentration due to PTCL’s lack of financial clarity.

Financial Transparency Issues
A key obstacle in the review process is PTCL’s failure to provide separate financial accounts for transactions between PTCL and its subsidiary, Ufone, to the Pakistan Telecommunication Authority (PTA). This lack of transparency has raised concerns about potential cross-subsidization and anti-competitive practices, complicating the CCP’s ability to evaluate the merger’s impact.

Additionally, PTCL’s unique integrated license, which allows it to offer a full range of telecommunication services, has created an uneven playing field for other operators. This licensing disparity has further heightened competition concerns, prompting the CCP to consider regulatory interventions.

Regulatory Oversight and Safeguards
The CCP is conducting a detailed analysis to assess whether additional regulatory measures are needed to prevent PTCL from gaining an unfair market advantage post-merger. The commission is evaluating several remedies, including fair spectrum allocation, to ensure PTCL does not gain an undue coverage advantage.

To safeguard consumer interests and prevent monopolistic practices, the CCP is analyzing market power concentration and competitive dynamics in the telecom sector. The review process includes consultations with industry stakeholders and an impact analysis on market share dynamics.

PTA’s Role in Maintaining Competition
While the CCP is focused on competition aspects, the Pakistan Telecommunication Authority (PTA) is tasked with implementing broader regulatory measures to maintain a competitive telecom environment. The Minister emphasized that the PTA must take proactive steps to strengthen regulatory oversight and ensure the long-term sustainability of the industry.

Ongoing Review
The merger review remains ongoing, with the CCP’s final decision dependent on the findings of its Phase II analysis. The commission is also working to implement necessary safeguards to protect market competition and prevent consumer harm.

The outcome of the review will have significant implications for Pakistan’s telecom sector, as the merger could reshape the competitive landscape and impact market dynamics.