Pakistan Telecommunication Company Limited (PTCL) has announced that it has secured a significant debt financing deal of up to $400 million from the International Finance Corporation (IFC), the investment arm of the World Bank.
This financing is intended to facilitate PTCL’s acquisition of Telenor Pakistan, a move that marks a significant development in Pakistan’s telecommunications landscape.
In a notice to the Pakistan Stock Exchange (PSX), PTCL confirmed the approval of the debt financing by the Board of Directors of the IFC. The company further stated that the finalization of work streams to sign financing agreements with the IFC is currently in progress and is expected to be completed on or before July 31, 2024. Details regarding the debt financing will be disclosed upon the finalization of the financing agreements.
The announcement of the debt financing deal has already had a positive impact on PTCL’s share price, which rose by 83 paisas to Rs17.02 per share following the news. This underscores the market’s confidence in PTCL’s strategic move to acquire Telenor Pakistan.
Last year in December, Telenor, a telecommunications giant based in Norway, had announced its decision to sell its Pakistan unit to PTCL in a transaction valued at 5.3 billion Norwegian crowns. This acquisition includes the repayment of intercompany loans and reduced interest-bearing liabilities, amounting to 1.8 billion Norwegian crowns.
PTCL had entered into a Share Purchase Agreement (SPA) with the shareholders of Telenor Pakistan for the acquisition of 100 percent of the shares on a cash-free, debt-free basis. The financing for this acquisition was initially planned to be sourced through external debt.
Telenor Pakistan, established 18 years ago, boasts a customer base of 45 million subscribers. PTCL, on the other hand, is a major player in the Pakistani telecom sector, with assets including Ufone, a mobile operator with over 20 million customers, and U Microfinance Bank. Etisalat, with a 26 percent stake, operates PTCL under an agreement with the government of Pakistan, which holds a 62 percent stake in the company.
Following the acquisition, Ufone’s user base is expected to exceed 70 million, positioning it as a formidable competitor in the Pakistani telecom market. This move is particularly noteworthy as it signifies one of the largest acquisition deals in Pakistan’s telecommunications sector, despite the prevailing economic challenges.
According to the Pakistan Telecommunication Authority (PTA), Pakistan currently has 194 million cellular subscribers and 124 million broadband subscribers, indicating a significant market potential. With four major telecommunication providers in the country, including Jazz, Zong, and Telenor, Pakistan’s telecom sector continues to attract attention from both domestic and international investors.
The acquisition of Telenor Pakistan by PTCL is poised to reshape the telecom landscape in Pakistan, paving the way for enhanced competition, innovation, and service offerings in the industry. As the deal progresses, stakeholders will closely monitor its impact on the market dynamics and consumer experience in the country’s telecommunications sector.
