PTCL acquires Telenor Pakistan for Rs108bn

Pakistan Telecommunication Company Limited (PSX: PTCL) has signed a Share Purchase Agreement (SPA) with the shareholders of Telenor Pakistan (Private) Limited (TPL) to buy 100% of TPL’s shares, based on an Enterprise Value of Rs108 billion ($380 million).

According to PTCL’s filing on the Pakistan Stock Exchange on Thursday, the deal will be done on a cash-free, debt-free basis and PTCL will fund the acquisition through external debt that it will raise.

Telenor Pakistan is a leading mobile operator serving 45 million subscribers with reported revenue of Rs112 billion and EBITDA margin of 43% based on the last 12 months (LTM) September 2023 financial reporting.

The transaction will enable in-market consolidation in the telecom sector, which will improve the long-term outlook of the industry.

PTCL is Pakistan’s leading information communication technology (ICT) company with market capitalisation of Rs 49 billion ($173 million), and the country’s largest fixed-line network.

The company’s products/services include voice services and high-speed broadband internet among others. PTCL holds 100% stake in Ufone and U Microfinance Bank. It is 62% owned by Government of Pakistan and 26% owned by Etisalat of UAE.

According to Topline Pakistan Research, the current shareholders of Telenor Pakistan will receive the debt that PTCL will raise from external sources. PTCL announced that it will fund the deal with borrowed money.

The research firm estimated that PTCL will need to pay Rs19 billion in annual interest, assuming it borrows $380 million (Rs108 billion) at 18% (8% interest rate + 10% currency depreciation). This is much lower than Telenor’s EBITDA of Rs112 billion in the past year.

The research firm also said that the merger of PTCL, Ufone, and Telenor will create synergies from their shared infrastructure.