The IFC, alongside a consortium including British International Investment (BII) and the Silk Road Fund (SRF), will provide US$400mn to Pakistan Telecommunication Company (PTCL) to finance its acquisition of Telenor Pakistan and Orion Towers.
With 7 years to the loan, US$224.5mn will come from the IFC’s account and managed funds, and US$175.5mn from BII and SRF.
PTCL had agreed to acquire 100% of Pakistan’s business unit from Nordic-based operator Telenor as part of the group’s exit from its Asian markets.
The financing package and acquisition are aimed at increasing investments in digital infrastructure, enhancing network quality and coverage, and fostering competition in Pakistan's Telecom sector, according to an IFC press release.
It is also anticipated to increase investments in digital infrastructure with a focus on underserved regions to boost network coverage and optimise customer experience. This aligns with the IFC’s commitment to narrowing the digital divide in Pakistan and boosting financial inclusion.
The deal highlights the transition of ‘Orion Towers’, the business unit of Telenor’s roughly 7,500 telecom towers. It’s not clear what PTCL’s tower strategy is, but the acquisition will place over 22,000 towers under the ownership of the merged entity.
From the perspective of the Pakistani market, the most intriguing aspect of Telenor's acquisition by PTCL is the potential creation of a near-monopoly, leaving only three major telecom players, including Jazz.
Market-leading operator Jazz has been trying to sell its 10,500-tower unit Deodar for around 10 years but faced repeat deal failures due to macroeconomic conditions. Both EDOTCO and TASC Towers were known to have been in discussions at some point about acquiring these sites.
This consolidation will likely have a significant impact on tower companies and may reignite efforts to sell tower assets, following three previous unsuccessful attempts. Finding a suitable buyer has been challenging, but a successful transaction could greatly revitalise the tower company market and attract substantial investment into Pakistan's telecom infrastructure.
Pakistan is one of the oldest and most active tower markets in the region. Saudi Arabian-based towerco TAWAL has a foothold and is looking to expand, and there are three local towercos Engro Enfrashare, Helium Towers, and Associated Technologies.
At TowerXchange Meetup MENA 2024 in February, a spokesman from UAE-based operator e& and joint-venture partner in PTCL, mentioned the group’s move to create a tower strategy in the next 18 months.
Hatem Bamatraf, President and Group CEO at PTCL, said “we are deeply appreciative of the IFC-led consortium for their pivotal role in financing this transformative deal, which marks a defining moment for Pakistan’s telecom sector,”
“This is the largest single financing ever secured in the industry, and it not only strengthens PTCL Group but also supports the long-term financial stability and sustainability of the entire telecom sector by enabling greater economies of scale. As a result, the industry will be better positioned to contribute to the national economy and societal progress. Through this strategic move, PTCL Group remains fully committed to delivering high-quality cellular and data services to an even wider customer base across Pakistan soon."
Khawaka Aftab Ahmed, IFC Regional Director for the Middle East, Pakistan and Afghanistan, commented “Pakistan’s telecommunications market offers significant opportunities for growth and investment”.
“This investment reflects IFC's commitment to bolstering inclusive, high-quality digital connectivity and infrastructure in the country by working together with our partners, including the PTCL Group, the Government of Pakistan, as well as co-investors BII and SRF.”
