Norway's Telenor announced that it has agreed to sell its Pakistan unit to Pakistan Telecommunications— a state-owned group. The transaction values the unit at 5.3 billion Norwegian crowns (USD 490 million). Telenor has been restructuring its Asian businesses and focusing on building larger units in Thailand and Malaysia through local mergers.
Telenor Portfolio Breakdown
The company had hoped to find a solution for its Pakistan business by the end of the year, but when a merger fell through, they decided that a sale was the next best option. Telenor CEO, Sigve Brekke, stated that the sale was better for their shareholders due to difficulties in establishing the desired structure and value.
Telenor Pakistan, which was launched 18 years ago, currently has 45 million customers. Pakistan Telecommunications' share price rose 8.3% following the announcement, while Telenor's share price increased by 1.1% at 08:37 GMT. Telenor Pakistan contributed 2.6 billion crowns in service revenue and 1.4 billion crowns in earnings before interest, tax, depreciation, and amortization (EBITDA) to the group in the first nine months of the year.
The deal is subject to regulatory approvals and is expected to be finalized in 2024. Telenor stated that the sale will not have a significant impact on its financials for 2023. Telenor's remaining Asian portfolio includes stakes in Grameenphone in Bangladesh, CelcomDigi in Malaysia, and True Corp. in Thailand, serving a combined total of nearly 160 million customers.
Telenor Asia will continue to be an active owner of these market-leading businesses in the region, according to Petter-Børre Furberg, the head of the company's operations in Asia.
Telenor—Pakistan Telecommunications Entity Benefits
The transaction underscores Telenor's strategic focus on restructuring its Asian businesses. By divesting its Pakistan unit, Telenor can concentrate its efforts on building larger and more robust units in key markets such as Thailand and Malaysia. This strategic realignment aligns with Telenor's goal of optimizing its portfolio and consolidating its presence in regions where it sees substantial growth potential.
For Pakistan Telecommunications, the acquisition presents a significant opportunity to enhance its market position and strengthen its operational capabilities. The infusion of Telenor's unit into a state-owned entity can contribute to the development and modernization of Pakistan's telecommunications infrastructure. This, in turn, may lead to improved services, expanded network coverage, and increased access to advanced technologies for the Pakistani population.
From a financial perspective, the transaction values Telenor's Pakistan unit at 5.3 billion Norwegian crowns (USD 490 million), indicating a substantial economic impact. The proceeds from the sale could potentially be reinvested by Telenor into its strategic initiatives, including the development and expansion of larger units in other Asian markets.
Telecommunications could foster international partnerships and knowledge exchange. Telenor's expertise in telecommunications, technology, and market dynamics may contribute to the continued growth and innovation within Pakistan's telecommunications sector.
