mobilink and warid merging

1. Assignment No : 2
Subject : Contemporary issues in management
Submitted to : Dr Shahid Ali
Submitted By : anonymous
Date : 11/7/2016
Institute of Management Sciences

2. Questionno1: Why merger take place, what are its basics?
Answer: Mergers and acquisitions taking place for many strategic reasons and for business
purposes with less financial budgets, and could not be able to gain market shares or with poor
and week managing skills but the main reason for Mobilink and Warid could be due to
economic reasons. There are some of the economic reasons in which merger can take place:
Increasing capabilities: Capability cannot be a specific department, the capability can be come
from purchasing a specific and unique technology stand instead of than trying to spend time
and create by one company itself .in this case Mobilink is not having a 4G service, and Warid
can provide a 4G service. But, Mobilink can serve a broader coverage area, though Warid’s
signal coverage is smaller as comparison. Together Mobilink and Warid clients can take benefit
from combined 4G service operative under the new company.
Gaining a large market share: Mobilink and Warid decide to because they want to gain a better
distribution and marketing network. They want to expand into the different markets where a
same nature of company is already operational and merging with it, instead of start and
opening their own branches. By merging they will take the overall subscriber on base of the
merged entity to 45 million or 37% of the Pakistan telecom market, which counters at 121
million subscribers in September 2015.
Cut Redundancies: Increasing acquisition activities between telecom companies it is a desire to
cut and avoid redundancies. Most of the time two rival providers in a same local area both build
an infrastructure such as cell towers, and paying separate leases for same infrastructure.
Mergers can remove these redundant expenses and unite their facilities and customer base of
two competing companies. Now after merging Mobilink and Warid have Total numbers of
Towers: 13,000 Current Mobilink Towers: 8,000. Current Warid Towers: 5,000. (3G Towers-
3,600) (4G LTE Towers-1,000). Currently Mobilink and Warid customers will be start using same
services, such as one single network, and one helpline.

3. Retaining Customers: In a highly competitive market it is very difficult to provide various
services due to increasing cost and attract and maintain customers, merger can be the only
option to provide greater service packages and supporting services will increase customer
satisfaction and it will keep the existing customers from going to or buying other company
services, with merger Mobilink can provide Delocalizing centers if a customer Cannot find a
warid Customer Service Center in a particular area, Now they will be able to try Mobilink
Customer Service Center.
Surviving: Every company is not willingly to give away its shares and identity, but due to
financial crises it can be a an only one option for the company to survive or a giant and big
competitor will forcefully acquiring by gaining 51% of the company shares and taking control.
But some of the companies doing mergers and acquisitions to grow and survive the market
such as Mobilink and Warid did, by sharing their competencies, and successfully gaining 37% of
the market shares.
Question No 2: The winning strategy for mobile telecommunication companies
in Pakistan has been the ‘cost leadership’ strategy. How do you view this
strategy for this current merger?
Answer: For Mobilink and Warid (Cost LeadershipStrategy) suits perfectly, because both of
companies are having competitive advatages. Mobilink have got 8000 towers and Warid got
only 5000 towers, but ward have 4G licence and Mobilink does not have it, and Mobilink got
more customers and Warid have less than mobilink. By merging both can use their competitive
advantage and getting more customers by cutting their fixed infrastructure cost per tower and
service cost and also providing various packages and fastest services such as 4G internet
services and gaining a huge market share as compare to other competitors. We can say there is
a win win situation for Mobilink and Warid through (Cost LeadershipStrategy).

4. Question No 3: Analyze the anatomy of Mobilink-Warid merger by describing
which company gained more from this transaction?
Answer: when the presidents of Mobilink and Warid said in conference that both of the firms
will merge and will be ultimately becoming into one company. Actually, by these decision 45
million subscribers of Mobilink and Warid has been taken into benefits. but, according to the
market sources, just in the name of so called merger, the maximum benefit goes to Moblink it
seems like a monopoly, usually merger allow two firms to become together to create one entity
But in Mobilink and Warid case it seems like Mobilink acquired Warid, because Mobilink
acquired 100% share of Warid, and warid is Vanished there is nothing left it become Mobilink,
and Dubai group will have 15% of shares of mobilink after 4 years, Dubai group will be allowed
to sell it 15% stakes at fair market price. This will create a huge lay offs and unemployment and
going to create uncertainty.
Question no 4: Describe some of the post-merger integration challenges for
Mobilink?
Answer: In November 26, 2015 Dhabi Group and VimpelCom decided to merge Warid and
Mobilink into a one single company. In the mobile telecommunications sector of Pakistan this is
the first merging. Mobilink will buy 100% shares of Warid. Dhabi Group will buy 15% shares of
Mobilink. It will be a one company as Mobilink. After 4 years of lock in period, Dhabi Group will
be permitted to sell it 15% stakes at a fair market value. VimpelCom is going to have first
privileges to these 15% of shares, but, Dhabi Group will have the option to sell 15% of shares to
someone other companies. Board of governance will be composing of 7 directors in which 6 will
be chosen by VimpelCom, and Dhabi Group can also appoint 1 director. Majority vote, will be
decide the resolution of board in general. CEO of the Mobilink will be Jeffrey Hedberg, and CFO
of Mobiblink will be Andrew Kemp.
The following steps in which the challenges and process are discussed:

5. First step
 Mobilink will buy 100% of shares.
 Dubai group will buy 15% of Mobilink shares.
 Only shares will be swapped and owned by Mobilink there is no cash transaction.
 Warid management will be taken over by Mobilink.
 During this step both company will continue to do their work as they were before
merging.
 Arrangement and plan for the merged firm will be developed. Both of the companies
will dealing how to initiate the joining process. Until the first step is completed they will
be known as one company. The first step will take 6 months for approvals and
regulations.
Step 2
 Shifting offices and link the franchises retailers and function of organizations and
may be layoff can be occur.
 Now the merged company will have single operations and supports, one distribution
and sales network.
Step 3
 Later 4 years of lock in period, 15% of Dubai group shares will be allowed and can be sell
off at market fair value.
 However VimpelCom is going to have the first rights to those 15% shares, but they can
also allow the Dubai group to sell it any company.
Impact on staffs and employees.
 Now it is clear that, some number of workers from both of the firms will be layoff from
after merged company. But there is a possibility that management will retain them on
need basis.

6. Value created through Merger.
 In 12 months till September 2015 with a combined if both after merged they generate
1.36 bill of revenue. This is far greater than competitors.
Effect on Customers.
 After merging Mobilink and Warid customers is going to start using a single network,
one service centers and one help line.
 Merged company customers will be using wide range of networks such as 3G, 2G, and
4G services and MobiCash.
 And their customer will be using the same Sim numbers.