Mobilink and Warid are merging into one company, we have received the confirmation that we were looking for over several weeks now.

According to official statement issued by VimpelCom, both Warid Telecom and Mobilink will merge into one company with 45 million combined customers.

Our sources tell that signing ceremony has been completed and now both companies are going to hold a press conference in Lahore later today to announce the details.

Upon successful completion of the transaction, which may take up to one year, Mobilink’s CEO Jeffrey Hedberg will become the CEO of the combined business and Mobilink’s CFO Andrew Kemp will become the CFO of the combined function.

The board of the merged company will consist of seven directors, of whom six will be nominated by VimpelCom and GTH (Mobilink) and one nominated by the Dhabi Group shareholders.

A notice sent from Mobilink to Karachi Stock Exchange said that merged entity will have combined revenue of 1.4 billion dollars for 12 months till September 2015, while EBITDA margin of above 40%. It further said that the transaction is expected to create Capex and Opex synergies with a net present value of approximately USD 500 million.

Notice said that merged entity will have a strong financial profile with Pro Forma Leverage in terms of Net debt/EBITDA or around 1.8x upon signing, that will trend further downwards as synergies materialize.

Commenting on the agreement, Jean-Yves Charlier, Chief Executive Officer of VimpelCom, said:

“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.”

Chairman of Dhabi Group, His Highness Sheikh Nahyan Mubarak Al Nahyan, said

“Creating the largest operator in Pakistan is a significant milestone for Mobilink and Warid but also for Pakistan as a whole. Warid’s partnership with Mobilink will create value for all stakeholders and pave the way for exceptional and cost-efficient telecommunication services for customers. Both parties bring their unique strengths to this merger. Warid, with its strong post-paid base and high quality 4G/LTE network will complement Mobilink’s position in the market. We are very pleased to continue to contribute to the strengthening of the competitive landscape for the broader telecom sector and the overall economy of Pakistan. The transaction reaffirms my own and my fellow investors’ long-standing and continuing commitment to Pakistan.”

Additional details of the Transaction

As part of the Transaction, Mobilink will first acquire 100% of Warid’s shares in consideration, while Dhabi Group shareholders will get approximately 15% of the shares of Mobilink. This process may take up to six months from today and is subject to regulatory approvals.

After this Warid and Mobilink will merge into one company, that will require another six months to close and regulatory approvals.

After a four year lock-in period following the date of closing of the Acquisition Transaction, the Dhabi Group shareholders will have the option to put their shares of the merged company to VimpelCom/GTH, and VimpelCom/GTH will have the option to call the shares of the merged company held by the Dhabi Group shareholders, each at fair market value.

While announcing the merger, Jeffrey Hedberg, President & CEO Mobilink, sent following email to Mobilink employees: