Ufone preparing for potential merger

18 Sep 2020

Pakistan Telecom Mobile Company Limited (PTML), which operates under the Ufone brand, could be merged with another provider, although there was conflicting information from sources on whether Ufone is to be merged with majority shareholder Pakistan Telecommunication Company Limited (PTCL) or if it will seek a tie-up with one of the nation’s three privately-owned cellcos. Local daily Pakistan Today’s Profit Magazine writes that, following objections from the law ministry regarding a merger of Ufone with one of its three rival cellcos, the company would instead look to merge with PTCL. According to the paper, proposals for Ufone’s merger with a private telco had been floated last year and were initially approved by the government, but the process was recently halted by the law ministry whilst it looked into matter. One unnamed source cited by the paper claimed that PTCL’s management and Etisalat (the UAE firm is a minority shareholder in PTCL but has management control over the company) had greenlit plans to merge Ufone into PTCL if the law ministry does not allow a merger with a private telco. Another unnamed source disputed the assertion, however. Meanwhile, Karachi-based brokerage house Topline Securities reports that PTCL has issued a request for proposals (RFP) to various financial institutions for the advisory role for a possible merger of Ufone with another operator.

Ufone’s financial performance has flagged in recent years, as rising operational costs and falling sales figures have impacted the company’s balance sheet, prompting the Pakistani government, PTCL and Etisalat to look into potential methods to rectify the situation.