LAHORE - The Mobilink parent company VimpelCom on Thursday announced the merger of Mobilink and Warid Telecom — Pakistan’s first mobile telecommunication’s acquisition.

“VimpelCom Ltd and Global Telecom Holding S.A.E., together with Warid Telecom Pakistan LLC and Bank Alfalah Limited (Dhabi Group shareholders), have reached an agreement to merge their Pakistan telecom businesses. The merger of Pakistan Mobile Communications Limited (Mobilink) and Warid Telecom Private Limited (Warid) will see the combined entity serving 45 million customers. The transaction is the first merger in the mobile telecommunications sector in Pakistan,” said Jeffrey Hedberg, President & CEO Mobilink.

Addressing a press conference here at a local hotel on Thursday, Jeffrey Hedberg stated that together with continued investments, the new entity will allow Warid and Mobilink to accelerate the availability of high-speed mobile telecommunications and provide consumers and businesses with a best-in-class mobile network, more competitively priced services and wider access to enablement facilities such as mobile financial services.

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 successful completion of the transaction, Mobilink’s CEO Jeffrey Hedberg will become the CEO of the combined business and Mobilink’s CFO Andrew Kemp will become the CFO of the combined function.

Jeffrey Hedberg stated that the transaction is expected to create Capex and Opex synergies with a net present value of approximately USD500 million. The combined revenue of both companies for the 12 months to September 2015 was USD 1.4 billion.

He said that as part of the transaction, Mobilink will first acquire 100% of Warid’s shares in consideration for the Dhabi Group shareholders acquiring approximately 15% of the shares of Mobilink. Following completion of the transaction, the parties intend to merge Warid into Mobilink in due course.

The transaction is expected to close within six months from today (yesterday), subject to obtaining approvals from the relevant authorities in Pakistan and the satisfaction of customary closing conditions. The merger is expected to close within 6 months from closing of the transaction, subject to the satisfaction of customary closing conditions. After a four year lock-in period following the date of closing of the acquisition transaction, 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.

Muneer Farooqui, President & CEO Warid, said that Warid, with its strong post-paid base and high quality 4G/LTE network, will complement Mobilink’s position in the market. “We are very pleased to continue to contribute to the strengthening of the competitive landscape for the broader telecom sector and the overall economy of Pakistan. The transaction reaffirms my own and my fellow investors’ long-standing and continuing commitment to Pakistan.”

Chief Executive Officer of VimpelCom maintained: ‘We are delighted to announce the agreement with the Dhabi Group shareholders to combine our businesses in Pakistan. With the addition of Warid to our already strong customer base at Mobilink, we will serve more than 45 million customers and offer a best-in-class mobile and high-speed data network – a key factor in the digital enablement of Pakistan’s economy.’

This transaction follows a number of strategic milestones for the company, including our recent joint venture announcement with WIND and 3 Italia in Italy and the agreement to sell our operations in Zimbabwe. This is yet another important step in our journey to continue delivering on our strategy to transform VimpelCom and improve our competitive position in our operating markets, he added.

Chairman of Dhabi Group, Sheikh Nahyan Mubarak Al Nahyan, said in a statement that creating the largest operator in Pakistan is a significant milestone for Mobilink and Warid but also for Pakistan as a whole. Warid’s partnership with Mobilink will create value for all stakeholders and pave the way for exceptional and cost-efficient telecommunication services for customers. Both parties bring their unique strengths to this merger.

Atif Khan from Islamabad adds: “We have to get an approval from Competition Commission of Pakistan, Pakistan Telecommunication Authority (PTA), Securities Exchange Commission of Pakistan, and superior court, as per law of the land,” said spokesman Mobilink.

The PTA executive must approve the deal to ensure the interests of subscribers are reflected in the outcome, officials said. “We are meeting next week with the both companies to discuss the merger in detail and how it should be carried out in a way that the consumer interest is ensured, said PTA chairman Syed Ismail Shah.

According to government officials the CCP will investigate that effect of the merger on the local market. One of the key questions it will face is how to ensure that the acquiring company does not become the dominant price setter.

The role of SECP will be to ensure that the directors and shareholders all agree for the merger and the companies have no liabilities and the step did not harm anyone in terms of payments.

“They have not come yet to us, and the proceedings will be initiated once they approach us,” official said.