The Pakistan Telecommunication Authority (PTA) approved the merger of GTH’s Mobilink and Warid Telecom pending an unconditional acceptance by both companies on certain conditions within 15 days of the issuance of the decision, according to propakistani website. Below is a summary of PTA’s most important conditions for the first step of the transaction (acquisition of Warid by Mobilink): Mobilink will accept and own all liabilities of Warid Telecom with respect to all the licences that Warid was issued by the Authority. In case of failure to discharge those liabilities, the PTA may take legal action Mobilink and Warid will not change names and brand names without 30 days’ prior written notice to PTA The parties shall not reduce the total number of interconnection circuits (E1s) allocated by them to other operators without the PTA’s prior approval. Interconnect capacities or their pricing shall not be used in a manner to impede other operators’ access to the customer of the merged entity. PTA’s approval is subject to clearance of all outstanding dues by the parties PTA would be free to take any legal action if information provided by Mobilink and Warid to the regulator for the approval application is fabricated, incomplete or false The Parties shall continue to operate as separate legal entities till the completion of the merger. If the Parties intend to do on-net calls amongst each other before the completion of the merger, they shall submit a proposal for PTA’s approval The Parties shall not merge their networks and shall not decommission any network element. BTSs may be decommissioned with 30 days prior notice to PTA. PTA may restrict decommissioning of any BTS, if so considered by PTA in alignment with condition 201 and 202 of the CCP’s decision on the merger PMCL and Warid will continue to submit their annual audited financial statements as separate entities until completion of the merger Both parties shall be responsible for the clearance of all tax liabilities arising from the transaction The agreements between the Parties and franchises / authorised retailers / sellers shall remain unchanged for a term of six months from the date of issuance of the approval   Our view: We see this as a positive step, as GTH edges closer to completing a transaction that is set to strengthen the company’s position in Pakistan, a market which we view as fragmented and marred by aggressive competition. As per the original announcement, the merger will be concluded within six months after obtaining regulatory approvals of the PTA and the Competition Commission of Pakistan (CCP) and closing the transaction. We note that the approval of the CCP has already been granted on 18 March 2016. Until now, the valuations remain undisclosed, rendering it difficult to make a quantitative assessment on whether the pricing is value-accretive to GTH shareholders, but the company had mentioned that the transaction should lead to capex and opex synergies of cUSD500mn, which we view as positive. We believe this announcement indicates the increased likelihood of a successful completion of the proposed transaction, which we deem as a positive catalyst for the stock; we reiterate our Buy rating on GTH. (propakistani website, Omar Maher, Karim Riad) Global Telecom Holding (GTH): USD1.74 per GDR / EGP3.03 per share as at 23 May 2016, Rating: Buy, FV: USD2.72 per GDR / EGP4.25 per share, MCap: USD1,826 million, GLTD LI / GLTDQ.L