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Pakistan’s competition regulator has questioned PTCL’s financial capacity to sustain the planned Telenor Pakistan merger, demanding binding investment commitments.
The Pakistan Telecommunication Company Limited (PTCL) is under mounting scrutiny from the Competition Commission of Pakistan (CCP) over its planned merger with Telenor Pakistan, as regulators raise doubts about whether the company can finance and sustain the deal without firm equity backing.
Officials said the CCP has even declined to accept assurances of financial support from Etisalat, PTCL’s UAE-based parent operating under the brand “e&,” insisting instead on binding commitments with concrete data. The Commission has demanded clarity on post-merger investment, spectrum auction participation, and long-term financial viability before approving.
At the heart of the Commission’s concern is PTCL’s ongoing financial strain. Both PTCL and its mobile subsidiary, Ufone, have been posting consistent losses in recent years, which regulators argue could undermine the merged entity’s stability. The CCP noted that PTCL’s responses so far have been broad and generic, lacking the detailed funding sources, capital expenditure breakdowns, and binding commitments typically required for mergers of this scale. Without explicit assurances, the Commission has warned that the merger could face delays or come with strict conditions.
One key area of contention is whether Etisalat is prepared to inject fresh equity into PTCL. The CCP has asked the operator to clarify whether external support will cover losses and finance new obligations, including participation in Pakistan’s anticipated 5G spectrum auction. Analysts point out that without substantial new investment, the merger could risk weakening rather than strengthening competition in the country’s telecom sector.
The regulator has also raised red flags over PTCL’s business plan for the merged entity. Regulators requested detailed disclosures on how PTCL intends to fund capital expenditures, whether through bank loans, internal cash flows, or parent-company backing. Industry observers note that globally, telecom mergers often require strong financial safeguards, as consolidation alone does not guarantee profitability. The lack of transparent commitments in PTCL’s case has fueled doubts about its preparedness.
Beyond financing, the CCP has criticized PTCL’s corporate disclosures and reporting standards. It flagged insufficient details in international direct dialling (IDD) revenues, where PTCL was asked to provide exact traffic volumes, per-minute rates, and a comparative analysis against competitors such as Jazz, Zong, and Telenor between 2022 and 2024. Instead, the company submitted incomplete and averaged data, which the CCP said compromised transparency.
Similar issues were identified in PTCL’s reporting of revenues under vague categories like “Other Core Products” and “Other Retail/Wholesale.” The CCP noted that significant revenues were booked under these headings without supporting volume or rate data, raising questions about internal accounting and revenue recognition practices.
Concerns extended to related-party transactions as well. PTCL was asked to provide detailed information on colocation revenues, where the company leases infrastructure to operators. However, disclosures included only average per-site rates for Ufone, omitting comparable data for competitors. Regulators have demanded site-specific details from 2022 to 2024 to assess whether PTCL’s dealings with Ufone are on market terms.
The Commission also faulted PTCL’s handling of IP bandwidth services and domestic private leased circuits (DPLC). In both cases, the company provided complete rate information for Ufone but only partial averages for other clients. Moreover, Ufone was found to receive discounted DPLC rates based on volume and location, without a clear methodology for cost allocation between Ufone and third parties. Regulators said this lack of transparency raised potential competition concerns and undermined the credibility of PTCL’s financial disclosures.
If approved, the PTCL-Telenor merger would reshape Pakistan’s telecom landscape by creating a market leader to rival Jazz and Zong. Telecom consolidation has been accelerating worldwide, driven by the need for scale in high-capital industries. In Pakistan, however, regulatory scrutiny has intensified in recent years. Previous mergers and spectrum allocations have faced prolonged delays, reflecting growing concern over competition, transparency, and financial sustainability.
Etisalat, which holds a 26% stake in PTCL, has historically struggled to align its Pakistani operations with its global strategy. Past disputes over revenue transfers and delayed investment flows have strained relations with local regulators. Industry analysts say the CCP’s latest intervention reflects lessons learned from earlier experiences, as the Commission appears unwilling to approve another merger without firm guarantees on funding and operational transparency.
As Pakistan prepares for the rollout of 5G, requiring heavy capital expenditure, the PTCL-Telenor deal is being watched closely as a test of regulatory resolve. Experts warn that without binding commitments on equity injections, transparent financial reporting, and competitive neutrality, the merger could risk leaving the sector in a weaker position rather than fostering growth.
In its latest communication, the CCP made clear that PTCL must justify its business plan with concrete data and prove how it intends to finance expansion in an already strained telecom market. Unless those commitments are provided, regulators argue, the merger risks undermining rather than enhancing competition and consumer choice in Pakistan’s telecom industry.
The CCP’s final decision will likely hinge on whether PTCL and Etisalat can demonstrate financial resilience and offer credible, binding commitments. For now, the future of the merger remains uncertain, with regulatory approval contingent on transparency and assurances of long-term sectoral stability.
