AIRLINK 75.45 Increased By ▲ 0.15 (0.2%)
BOP 4.99 Increased By ▲ 0.05 (1.01%)
CNERGY 4.41 Increased By ▲ 0.02 (0.46%)
DFML 41.45 Increased By ▲ 0.27 (0.66%)
DGKC 84.90 Increased By ▲ 1.59 (1.91%)
FCCL 22.00 Increased By ▲ 0.35 (1.62%)
FFBL 32.33 Increased By ▲ 0.33 (1.03%)
FFL 9.41 Decreased By ▼ -0.01 (-0.11%)
GGL 10.14 Increased By ▲ 0.06 (0.6%)
HASCOL 6.87 Increased By ▲ 0.05 (0.73%)
HBL 114.00 No Change ▼ 0.00 (0%)
HUBC 139.88 Increased By ▲ 0.78 (0.56%)
HUMNL 12.00 No Change ▼ 0.00 (0%)
KEL 4.90 Decreased By ▼ -0.01 (-0.2%)
KOSM 4.48 Increased By ▲ 0.12 (2.75%)
MLCF 37.76 Increased By ▲ 0.25 (0.67%)
OGDC 133.30 Increased By ▲ 0.45 (0.34%)
PAEL 24.93 Increased By ▲ 0.08 (0.32%)
PPL 118.50 Increased By ▲ 0.70 (0.59%)
PRL 26.14 Increased By ▲ 0.08 (0.31%)
PTC 13.80 Increased By ▲ 0.08 (0.58%)
SEARL 57.35 Increased By ▲ 0.10 (0.17%)
SNGP 66.50 No Change ▼ 0.00 (0%)
SSGC 10.30 Increased By ▲ 0.06 (0.59%)
TELE 8.28 Increased By ▲ 0.07 (0.85%)
TPLP 10.75 Increased By ▲ 0.05 (0.47%)
TRG 62.97 Increased By ▲ 0.57 (0.91%)
UNITY 26.90 Decreased By ▼ -0.14 (-0.52%)
WTL 1.36 Increased By ▲ 0.01 (0.74%)
BR100 7,878 Increased By 32.5 (0.41%)
BR30 25,379 Increased By 123 (0.49%)
KSE100 75,073 Increased By 237 (0.32%)
KSE30 24,094 Increased By 89.8 (0.37%)

About a year ago when Telenor Group was merging its Thailand operations with a local conglomerate, its President made a statement that inadvertently fueled talks of Telenor reducing its presence in Pakistan. Back in November 2021, Reuters quoted the Telenor chief as saying: “Telenor will continue to look for merger opportunities in Asia, including in Pakistan and on a regional basis.” A year later, if recent news media reports are credible, it seems that the Norway-based telecoms major is planning to go for an outright sale instead of a merger in Pakistan.

If a sale indeed went through, it won’t come as a surprise to those who were keeping tabs on industry developments. It isn’t a secret that Telenor Group’s quarter-century-long romance 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.

Telenor’s retrenchment from Asia started in earnest some five years ago. Confronting growing problems in the Indian market, the group sold its Telenor India business to Bharti Airtel in 2017-18. After the 2021 Myanmar coup, Telenor exited that market under some difficult circumstances. Last year, Telenor decided to merge its Malaysia operations with local player Axiata, a transaction that was completed last month. Telenor’s Thailand merger with CP Group, which was announced in November 2021, has run into some hiccups, but the group expects to close the merger in early 2023.

In Bangladesh, the Telenor grouphas about 56 percent stake in Grameenphone Limited, which leads the market with 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 mergeror a sale, but the future looking uncertain, waiting for an outcome.

In a challenging operating environment where the group seems to be scaling back from Asia, it won’t come as a shockif 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. Earlier in May this year, BR Research interviewed Jørgen Rostrup, EVP and Head of Telenor Asia. 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, where we have a common business perspective and then try 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.”

Six months later, 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.

To conclude, any move by Telenor Group – from reducing its local presence through a merger to taking a total exit from Pakistan via a sale– can be better understood in the context of local-market challenges as well as group-level thinking to refocus its Asian businesson markets where it can operate with a stronger position.In any case, it won’t count as a vote of investor confidence – something which local authorities (especially the fiscal ones) must take note of. There will be material consequences for rest of the telecom market if a consolidation is indeed on the horizon. Those aspects will be analyzed in this space later.


Comments are closed.

Muhammad Kashif Dec 10, 2022 01:56pm
The departure of Telenor from Pakistan is the worst sign of economic conditions in Pakistan. This departure will encourage other multi national companies to stop functioning in Pakistan.
thumb_up Recommended (0)