Catchy packages, discount offers and exciting new products and services by telecom operators have been enough to keep 99 million mobile subscribers busy, leaving them less interested in what is happening behind the scenes.
Though the local telecom industry has not seen behind-the-scene activity just yet, the ongoing restructuring in the global telecom industry could end up altering the domestic structure in turn.
Lately, Russian telecom operator VimpelCom and Egypts Weather Investments have signed an agreement to merge the two groups, making them the worlds fifth largest telecom company.
Local mobile users may be unfamiliar with these two companies, but it is interesting to note that these two groups have direct links with parent firms of the two largest telecom players in Pakistan.
To make it simple, Weather Investments owns 51.7 percent stake in Orascom - Mobilinks parent company, while Telenor ASA - Telenor Pakistans parent firm - holds 31.7 percent stake in the merged entity, new VimpelCom.
Therefore, Mobilinks management might see positive changes in the form of fresh financial support and technological enhancements from the new VimpelCom. However, Telenors 16.2 percent stake in Orascom would not be enough to control Mobilinks management. Moreover, Telenor ASA will hold less voting rights than Altimo Holdings & Investments Limited in the new VimpelCom.
This engagement would make the two largest nationwide operators - Mobilink and Telenor - distant relatives, thereby increasing chances of a merger between the two sometime in the future.
"Such complex deals are difficult to analyze, especially when so many stakeholders and independent board of directors are involved. It will take years to quantify and calculate the synergies that this portfolio of telecom companies will realize after the merger", according to one industry source who preferred not to be named.
With the snail-paced growth in subscription and falling revenues, the case for consolidation has become stronger in the last two years.
Cellular operators desires to capture maximum market share has led to a cut-throat price war in recent years - a move that has dragged Average Revenue per User to $2.5, down by nearly three-quarters in the past six years. Hence, the poor bottom-line performance on the part of local players.
Reports from the telecom firms headquarters suggest that every player is looking for a potential merger. Nevertheless, rifts over who will own the combined company have been hindering progress.
Since incentives for merger are considerably high, it is quite likely that this time they will choose synergies. But, the market expects that it would be difficult for them to muster the regulatory nods from PTA and the Competition Commission of Pakistan, as their combined market share will exceed 50 percent.
Besides that, the other operators (Ufone, Warid, Zong) can potentially create rifts to discourage a merger between these two operators.
Whatever the case is, Telenor and Mobilink are now well-placed to start sharing infrastructure and other operating expenses, such as call centres to realize operational synergies. Whether they do it or not is another question.