Engro Secures CCP Approval for $563 Million Deal to Acquire Jazz’s Deodar Tower Assets

The Competition Commission of Pakistan (CCP) has granted approval for Engro Corporation’s acquisition of Deodar (Pvt.) Ltd., the tower subsidiary of Pakistan Mobile Communications Limited (Jazz), in a deal valued at approximately $563 million. The transaction is expected to have significant implications for the telecom infrastructure landscape in Pakistan.

The agreement enables Engro Connect, as a subsidiary, to acquire control of Deodar’s full network of 10,500 telecom towers. Engro Connect already has 4,250 telecom towers, and this transaction adds another 10,500. Engro’s market position as Pakistan’s largest independent telecom infrastructure provider can be obtained post-transaction, with a market share exceeding 53%.

Engro’s network tower acquisitions will improve telecommunications infrastructure by allowing mobile network carriers to share facilities, consequently increasing service quality and cost management for the companies.

Engro will acquire Deodar’s current $375 million debt load and inject new capital by spending an additional $187.7 million. Engro’s acquisition funding approach involves two parts: 67% debt and 33% equity, with its own financial resources supporting the transaction. The financial architecture includes methodology for balancing debt funding and equity investment.

Jazz’s Shift to an Asset-Light Model

Jazz, a subsidiary of VEON, has long been exploring options to divest its telecom tower infrastructure, citing factors such as rising energy expenditures and declining profit margins as well as the widespread adoption of asset-light telecom business models in the industry.

The tower assets encountered previous failure in sale attempts that involved Edotco and the TPL-TASC consortium. The agreement enables Jazz Telecom to maintain its telecommunication service focus while Engro takes full responsibility for managing its infrastructure.

The transaction has obtained approval from the CCP which indicates that regulatory agencies view the proposal positively regarding the expected approval process. The State Bank of Pakistan (SBP) alongside the Federal Board of Revenue (FBR) are expected to create no significant barriers in this transaction because the main aspect transfers debt instead of capital funds. The deal requires surety of multiple corporate authorisations as well as High Court clearance before execution.

The partnership will positively influence Pakistan’s telecom industry since MNOs benefit from optimized infrastructure utilization together with diminished operational expenses. Engro intends to offer tower-sharing services that support telecom operators sustain lower costs while enhancing their network reach and service delivery quality. The purchase strengthens Engro’s standing in Pakistan’s telecommunications infrastructure market since the company entered this sector in 2018.

After this announcement the stock value of Engro increased by 9.17% to close at Rs407.54 on the Pakistan Stock Exchange (PSX). The market demonstrates positive expectations about the acquisition’s advantages by demonstrating this upward trend in stock value.

The deal is expected to enhance the country’s telecom infrastructure, increase efficiency, and provide telecom operators with a cost-effective solution for managing network coverage. As Engro expands its role in telecom infrastructure, it could play a key part in supporting the digital transformation of Pakistan’s telecommunications sector.