The Competition Commission of Pakistan (CCP) has expressed serious concerns over the planned merger between Telenor Pakistan and Pakistan Telecommunication Company Limited (PTCL), warning that the deal could sharply weaken competition in key wholesale and retail telecom markets.
In its review under Regulation 10 of CMCR 2016, the CCP evaluated several factors, including market concentration trends, barriers to entry, countervailing power, and the risk of eliminating effective competitors.
The findings indicate that the proposed consolidation would lead to highly concentrated market conditions, raising concerns about consumer choice and industry innovation.
Market Concentration Risks
In the wholesale domestic leased line segment, the merged company, known as MergeCo, would control 42.7%, almost equal to PTCL’s existing 42.1%. This would leave smaller providers with a negligible market share.
Similarly, in wholesale IP bandwidth, PTCL already holds 64.5%, while Transworld Associates (TWA) controls the remaining 35.5%. Any consolidation in this area, the CCP cautioned, risks reinforcing a duopoly and shutting out new entrants.
The retail long-distance and international (LDI) segment also shows concerning numbers. MergeCo would secure 43.18% of the market, overtaking PTCL’s 32.67%, while other competitors remain far behind. Such concentration, regulators argue, may reduce incentives for innovation and limit consumer options.
Regulator May Demand Remedies Before Approval
Citing Regulation 10(h), the CCP stressed that the removal of effective competitors could lead to collusive behavior in an already concentrated sector. The Commission noted that vertical integration and the marginalization of smaller operators such as LinkDotNet and Wateen could further undermine competition.
Industry analysts say the CCP’s scrutiny highlights the risks of allowing just two or three companies to dominate Pakistan’s telecom infrastructure backbone. With consolidation accelerating, regulators face the challenge of ensuring growth without compromising consumer welfare.
The CCP is expected to seek remedies or binding commitments before approving, as it tries to strike a balance between market efficiency and healthy competition.