VimpelCom and Global Telecom Holding (GTH), Warid Telecom Pakistan and Bank Alfalah (Dhabi Group shareholders), have agreed to merge their Pakistan telecom businesses. The merger of Warid Telecom with Pakistan's largest carrier Mobilink will create an operator serving 45 million customers and put the company in a better position to develop high-speed mobile networks. The transaction is the first merger in the mobile sector in Pakistan.
VimpelCom and the Dhabi Group shareholders have agreed a clear corporate governance structure. The board will consist of seven directors, of whom six will be nominated by VimpelCom and GTH and one nominated by the Dhabi Group shareholders. Upon completion, Mobilink CEO Jeffrey Hedberg will remain CEO of the combined business and Mobilink’s CFO Andrew Kemp the new CFO.
The transaction is expected to create capex and opex synergies with a net present value of USD 500 million. The combined revenue of both companies for the 12 months to September was USD 1.4 billion.
Under the terms of the deal, Mobilink will first buy all of Warid. The Dhabi Group shareholders will then take a 15 percent stake in Mobilink. When the transaction is complete, the parties will merge Warid into Mobilink.
The share transaction is expected to close within six months, subject to approvals from the relevant authorities in Pakistan. The merger is expected to close within six months after that. After a four year lock-in period, the Dhabi Group shareholders will have the option to put their shares of the merged company to VimpelCom/GTH, and VimpelCom/GTH will have the option to call the shares of the merged company held by the Dhabi Group shareholders, each at fair market value.
