Wednesday, March 18, 2009

Mergers in telecom sector in the offing

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LAHORE: Following acquisition of commercial banks, mergers in the telecommunication sector are on the cards as a delegation of China Mobile Communication Corporation (CMCC) is visiting Pakistan to talk with other mobile operators.

The News has learnt that the OMCC delegation is headed by its vice chairman and included project director for overseas investments.

Expected mergers in telecom are likely to change the shape of the industry by the end of this year. Mergers of commercial banks were seen recently in the country after the global financial crunch which also affected growth of Pakistani financial sector as well.

Famous mergers in the financial sector encompassed Union Bank Ltd with Standard Chartered Bank and ABN-Amro Bank with Royal Bank of Scotland (RBS). Similarly, PICIC Commercial Bank has merged into NIB Bank. The banking and telecom sectors have seen unprecedented growth during the last three years or so.

However, owing to the current economic slowdown, growth of these two sectors like others had also nosedived. The telecom sector is currently working to reduce its operational costs by shedding employees who were hired during the last five years.

Industry sources said at least two major companies would be merged into one by the end of this year which would intensify competition in the telecom sector. It is learnt that China Mobile Pakistan (CM-PAK) is in serious talks with other cellular operators of Pakistan in a bid to expand its network. In this regard, some initial talks had taken place earlier. Now a second round of talks has started which would likely lead to a deal or open the way for more discussions.

The CMCC delegation is due to meet other operators in the next two days. It is expected that the visiting delegation would give initial offer to other operators for acquiring their network.The CMCC delegation will also check performance of Zong in order to expand its network.

When contacted, Zong Chief Executive Officer Qain Li confirmed that the CMCC delegation is currently on a visit to Pakistan. It is looking into the possibility of a business venture, he added.

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