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Pakistan Telecommunication Company Ltd. (PSX: PTC) is on track for a major valuation boost after acquiring Telenor Pakistan. Analysts expect the company’s fair value to rise beyond Rs65 per share as profits grow, synergies improve, and financing terms remain favorable.
A report by Topline Securities called the Rs108 billion deal “well-timed,” citing easing global interest rates and stronger telecom fundamentals. The acquisition, completed on a cash-free and debt-free basis, is already showing positive results. Telenor’s earnings before interest, tax, depreciation, and amortization (EBITDA) have increased 15-16% since negotiations. Meanwhile, its average revenue per user (ARPU) has climbed by more than 30%.
PTC’s Estimated EPS Gains from the Acquisition
| Details | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| EBITDA | 55,000 | 60,500 | 66,550 |
| Less: Depreciation | 7,200 | 7,560 | 7,938 |
| Less: Finance Cost | 10,378 | 11,452 | 11,036 |
| Less: Exchange Loss | 6,768 | 6,918 | 6,247 |
| Profit Before Tax | 30,654 | 34,570 | 41,330 |
| Tax @ 39% | 11,955 | 13,482 | 16,119 |
| Profit After Tax (PAT) | 18,699 | 21,088 | 25,211 |
| Number of Shares (mn) | 5,100 | 5,100 | 5,100 |
| Earnings Per Share (EPS) | 3.7 | 4.1 | 4.9 |
The deal values Telenor Pakistan at an enterprise value (EV)/EBITDA multiple of 2.25x, far below global and regional averages. Globally, telecom operators trade around 6.7x, while emerging markets trade at a 25% discount. This puts Pakistan’s fair multiple near 5x.
For the 12 months ending September 2023, Telenor Pakistan reported revenue of Rs112 billion and EBITDA of Rs48 billion. Both have improved, with EBITDA now above Rs55 billion and ARPU up from Rs195 in September 2023 to Rs255 by June 2025.
Lower interest rates are helping PTC strengthen its financial outlook. The company will fund the acquisition through a US$400 million seven-year debt facility. The financing is arranged by the International Finance Corporation (IFC) in partnership with the Silk Road Fund (SRF) and British International Investment (BII).
Topline Securities projects the deal will add Rs3.7 to Rs4.9 per share to PTC’s earnings in three years. The estimate assumes annual EBITDA of Rs55 billion and financing costs at SOFR plus 5%, similar to IFC-backed projects like the Pakistan International Bulk Terminal (PIBTL).
A sizable bargain gain could also emerge from the deal. Telenor Pakistan’s non-current assets, excluding deferred tax and contract costs, are valued between Rs160 and Rs170 billion on its parent company’s books. This amount is much higher than the Rs108 billion enterprise value agreed upon in the transaction.
After completion, PTC’s consolidated EBITDA is expected to reach Rs135 billion. Its total net debt will likely increase to Rs322 billion, including Rs113 billion tied to the Telenor acquisition.
Once merged, the Ufone-Telenor unit will control about 35% of Pakistan’s mobile market, becoming the second-largest operator after Jazz. Ufone’s strong urban reach and Telenor’s deep rural presence will give PTC nationwide coverage. The company is expected to see stronger ARPU, network efficiency, and cost savings through shared infrastructure and reduced overheads.
