Mobilink and Warid merger with $500m price tag

The parent companies of Mobilink and Warid Telecom announced on Thursday that they had reached a merger agreement at a price tag of $500 million, Mobilink will acquire 100 per cent shares of Warid under the agreement while the shareholders of Warid Telecom will get 15 per cent shares of Mobilink.

An announcement by VimpelCom, said that VimpelCom and Global Telecom Holding S.A.E. (GTH), together with Warid Telecom Pakistan LLC and Bank Alfalah Limited (Dhabi Group shareholders), reached an agreement on Thursday to merge their Pakistan telecom businesses.

The transaction is expected to create Capex and Opex synergies with a net present value of approximately $ 500 million. The combined revenue of both companies for the 12 months to September 2015 was $1.4 billion.

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 operation.

The transaction is expected to close within six months from date of agreement, 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.

The merger of Mobilink and Warid Telecom will see the combined entity serving 45 million customers. The transaction is the first merger in the mobile telecommunications sector in Pakistan.

Commenting on the agreement, VimpelCom Chief Executive Officer Jean-Yves Charlier said, “We are delighted to announce the agreement with the Dhabi Group shareholders today 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.”

Dhabi Group Chairman His Highness Sheikh Nahyan Mubarak Al Nahyan said, “Creating the largest operator in Pakistan is a significant milestone not only 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. 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.”