Telenor Defies Rumors Of Shutting Down Operations In Pakistan

Over the last couple of weeks, Telenor Pakistan has been in the news as they decided to sell their business and it was up for the sale. And a couple of days ago, the news surged that Telenor Pakistan is in talks with an Emirates-based multinational company to sell its operations.

While all of this was in progress, the Telenor services were giving a really hard time to the users which established a public idea that Telenor was shutting down its operations in Pakistan. But on Thursday, the telecom company said that news being reported about Telenor shutting down its operations in Pakistan was incorrect.

The sale was predicted a year ago back in November 2021, the Telenor chief has said:

“Telenor will continue to look for merger opportunities in Asia, including in Pakistan and on a regional basis.” 

While Telenor has said that they are not quitting Pakistan just yet, it won’t be a surprise if they change their mind later. It isn’t a secret that Telenor Group’s relationship with emerging Asian markets has worn off, except in a couple of markets. The earlier allure of gaining hundreds of millions of subscribers and juicy returns in rapidly-growing Asian markets was marred over time by local authorities’ tight regulations, pricey spectrum auctions, forced network shutdowns, security-related issues, growing competition from local/regional players, among other reasons.

Bangladesh is possibly the only market that has something to offer Telenor group as it has about 56 percent stake in Grameenphone Limited, which leads the market with a 46 percent revenue share. Bangladesh is a strong and special market, where Telenor’s Asian journey began some 25 years ago. That leaves Pakistan as the only market for Telenor group (outside its Nordic ‘backbone’ region) where the group still has complete ownership of local operations, with no publicly-notified plans for a merger or a sale, but the future looks uncertain, waiting for an outcome.

So Telenor is gaining nothing from Asia and the group seems to be scaling back from Asia, it won’t come as a shock if its Pakistan business also went up for grabs. The group has already shown intent to rebalance its Asia portfolio and allocate new investment towards promising digital ventures. When asked about Telenor’s ‘Asian retreat,’ this is how he responded:

“With these changes, we believe that having strong positions and significant scale in each of our markets is important to be a good player going forward. We are now working with partners, with whom we have a common business perspective and then trying to make a stronger situation out of that. We are trying to merge in Malaysia, and hopefully, that will go through soon. And we are doing the same in Thailand, creating a number-one position for our business there, the same as we have in Bangladesh. We are not there yet in Pakistan, but we are working to be a strong partner in this market.”

Now it has become more than evident that Pakistan is a pain for Telenor Group and they want to get rid of it as soon as possible. Because it has become more difficult for telecom operators to make money in this market. Some of that is down to the broader economic difficulties, rising costs of services (especially electricity), and policy unpredictability that are being experienced by several industries. In the case of telecoms, pre-existing challenges have been exacerbated by the ongoing macroeconomic crisis, thus impacting fresh network investments, revenue growth, sponsor returns, and even long-term perspective on this market.

Telenor Group is using all these different tactics to make the exit as smooth as possible by reducing its local presence through a merger and taking a total exit from Pakistan via a sale. Which can be better understood in the context of local-market challenges as well as group-level thinking to refocus its Asian business markets where it can operate with a stronger position. In any case, it won’t count as a vote of investor confidence – something that local authorities (especially the fiscal ones) must take note of. There will be material consequences for the rest of the telecom market if consolidation is indeed on the horizon.

Arif

Arif

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