Mobilink and Warid Merge into One Company

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Mobilink and Warid Merge into One Company

The parent companies of Mobilink and Warid Telecom announced on Thursday that they had reached a merger agreement.

“We are delighted to announce the agreement with the Dhabi Group shareholders today to combine our businesses in Pakistan. With the addition of Warid to our already strong customer base at Mobilink, we will serve more than 45 million customers and offer a best-in-class mobile and high-speed data network – a key factor in the digital enablement of Pakistan’s economy. This transaction follows a number of strategic milestones for the company, including our recent joint venture announcement with WIND and 3 Italia in Italy and the agreement to sell our operations in Zimbabwe. This is yet another important step in our journey to continue delivering on our strategy to transform VimpelCom and improve our competitive position in our operating markets.” said Jean-Yves Charlier, Chief Executive Officer of VimpelCom, Mobilink’s parent company.

Mobilink and Warid Merge into One Company

A joint press release issued by both companies says Mobilink will first acquire 100 per cent of Warid’s shares in consideration for the Dhabi Group (Warid’s parent company) shareholders acquiring approximately 15pc of Mobilink shares.

Mobilink and Warid Merge into One Company

The merged entity will serve over 45 million mobile customers and will become the leading high-speed mobile network in Pakistan, claims the release.

Mobilink and Warid Merge into One Company

The merger will create synergies worth $500m.

“The transaction is expected to close within six months from today, subject to obtaining approvals from the relevant authorities in Pakistan and the satisfaction of customary closing conditions,” reads the press release.

Mobilink and Warid Merge into One Company

Yesterday Mobilink and Warid announced that they have agreed to merge both companies to become one company within few months from today. CEOs of both companies held a press conference in Lahore, where they explained to the media about the ins and outs of the entire deal.

Mobilink and Warid Merge into One Company

Mobilink-Warid Merger:

  • Phase 1
    • Mobilink will acquire 100% shares of Warid.
    • Dhabi Group will get 15% shares of Mobilink.
    • There’s no cash transaction involved, just the shares will be swapped
    • This process may take up to six months from yesterday and is subject to regulatory approvals.
    • Till this phase is completed, both companies will continue to work separately as they were.
    • During phase 1, planning and strategy for the merged company will be devised. All parties will get involved to lay down a plan on how to merge the companies. We are assuming that majority of planing and strategy work has already been done, but it won’t get public until this phase 1 completed.
    • Mobilink and Warid Merge into One Company
  • Phase 2
    • In phase two, after the completion of phase 1, Warid and Mobilink will merge into one company.
    • This will take another six months to close and will require regulatory approvals.
    • After this, there will be one company as an outcome.
    • At this point, shifting of offices, consolidation of franchisees, retailers, and various organizational functions and employees will occur.
    • This single merged company may carry the name of Mobilink or may adopt any new brand name.
    • This single company will have single support operations, single sales and distribution network, one single PR agency and so on.
    • Mobilink and Warid Merge into One Company
  • Phase 3
    • After a lock-in period of 4 years, Dhabi Group will be allowed to sell its 15% stakes at fair market value.
    • VimpelCom will have first rights to these 15% shares, however, they may offer Dhabi Group to sell these shares to anyone else.
    • Mobilink and Warid Merge into One Company
  • Governance:
    • The Board of the merged company will be composed of 7 directors of which 6 will be nominated by VimpelCom; while Dhabi Group can appoint 1 director.
    • Resolutions of the Board, in general, shall be decided by majority vote, except for certain limited reserved matters.
    • Jeffrey Hedberg will be the CEO of merged company.
    • Andrew Kemp will be the CFO of merged company.
    • Mobilink and Warid Merge into One Company
  • Impact on Employees:
    • It is now clear that certain, but yet unknown, number of employees from both companies will be removed from the merged company. Management said that employees, franchises, retailers and all other resources will be retained on need, performance, and skill-set basis.
    • Mobilink and Warid Merge into One Company
  • Value Creation through Merger
    • USD 115 million annual run-rate cost synergies, 90% expected by third year post-closing; in excess of USD 500 million NPV cost synergies expected, net of integration costs.
    • Distributions projected within the first two years post-closing.
    • Leverage: Mobilink 1.8x Net debt/EBITDA at signing.
    • Pro forma revenue and EBITDA margin of USD 1.4 billion and above 40% respectively.
    • Mobilink and Warid Merge into One Company
  • Impact on Customers:
    • Current Warid and Current Mobilink customers will start using one single network, one helpline and same services.
    • Customers of merged company will be offered compound services of both Warid and Mobilink, including 2G, 3G, 4G, MobiCash.
    • Customers will be allowed to retain their current numbers
    • Mobilink and Warid Merge into One Company

Merged company in numbers:

  • Combined footprint and customer base of 45 million with 37.6% market share (w.r.t Sep 2015 data)
  • Total number of Towers: 13,000
    • Current Mobilink Towers: 8,000
    • Current Warid Towers: 5,000
    • Towers to be decommissioned: 3,000 to 4,000
    • Towers after decommissioning: 9,000 to 10,000
    • 3G Towers: 3,600
    • 4G LTE Towers: 1,000
  • Financials:
    • Current Mobilink Revenues for 12 Months till Sep 2015: USD 1 Billion
    • Current Warid Revenues for 12 Months till Sep 2015: USD 357 Million
    • pro forma revenues for 12 months till Sep 2015: 1.36 billion
    • Net Debt Position as of Sep 2015:
      • Mobilink: USD 380 Million
      • Warid: USD 470 Million
      • Pro Forma: USD 850 Million
  • Enlarged and improved mobile network with over 80% population coverage (2G)
  • Largest network, with almost 5,000 3G and 4G/LTE sites
  • Mobilink and Warid Merge into One Company

 

About Amjad Ayub

A Web Developer, IT Professional.

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