Has Warid Landed a Deal?

Recently rumors started circulating in the market of a deal between Mobilink and Warid, with the former acquiring the latter after a long negotiation process. The rumors gained strength on Saturday and continue to dominate telecom grapevines.

Rumor remains a rumor

The news of Warid acquisition is not new and other telecom operators have tried to buy the company. The market had been abuzz with the possible Warid deals since 2011 and the trend seems to continue even now. It it not a hidden secret that the gulf based Abu Dhabi group wants to sell the company; so far no buyer has been successful in closing the deal with them.

Warid telecom entered the market along with Telenor back in mid-2000s and made a name for itself with exceptional call quality. During its decade of existence in Pakistan, where other companies gradually shifted to more cost-effective hardware providers such as ZTE, Warid continued to its relation with Nokia Siemens Network whose superior hardware maintained strong performance in most parts of the country where Warid provides coverage.

What changed?

The competition between providers has been so tough that customers, especially prepaid ones, go for the lowest call rates and even switch network as soon as a new (and lower) call/sms package is announced. The low ARPU (Average Revenue Per User) kept getting low over the years and that made business tough for Warid.

At the same time Warid focused heavily on the corporate/business users and currently hold the highest number of corporate clients in Pakistan. The lack of aggression to acquire prepaid users left Warid behind and slowly the total number of users reduced, so much so that Zong overtook Warid a few years ago and left the company at the very bottom of the list.

Eventually Warid’s management realized it can no longer compete based on price wars and talks about mergers/acquisition began.

How true is it?

Until a proper announcement is made, the news of Warid’s acquisition should be treated as a rumor. There have been talks between various telecoms acquiring Warid and some had gone to advanced levels only to break down towards the end. There are obvious benefits for any non-4G license holder to acquire Warid, gaining the LTE network the telecom provider recently established in major urban areas of Pakistan.

Without formal announcement by Warid and/or other companies, the news hold now value and only expectations/anticipation.