India’s Bharti Airtel and Malaysia’s Axiata are reportedly in talks to merge their Sri Lankan units. Such a deal would be similar in structure to the Asian telecoms giants’ recently agreed merger in Bangladesh which, if successful, will see Axiata take a controlling stake in the combined entity.
India’s Bharti Airtel (NSE:BHARTIARTL) and Malaysia’s Axiata (MYX:6888) are reportedly in talks to merge their Sri Lankan units. Such a deal would be similar in structure to the Asian telecoms giants’ recently agreed merger in Bangladesh.
The deal would likely take the form of a share swap and, as with the Bangladeshi merger, see Axiata become the dominant shareholder in the combined entity, the Economic Times cited two people familiar saying.
The Malaysian telco’s Sri Lankan unit, Dialog Axiata (CSE:DIAL.N0000), in which it has an 83.32% stake, may issue shares to Bharti Singapore, the report stated, adding that negotiations are still in progress. Dialog Axiata has a market capitalisation of LKR81.44bn (US$565.56m).
The merger could run into regulatory hurdles, however, as Dialog Axiata is the dominant local mobile operator, with 10.3 million subscribers as of the end of December 2015. Airtel Lanka, which became the country’s fifth mobile operator in January 2009, says on its website that it has 1.8 million subscribers nationwide.
Airtel and Axiata agreed in late January to merge their operations in Bangladesh to create a stronger competitor to market leader Grameenphone, with some 40 million customers. The merger, expected to close in the first half of 2016, will see Axiata take a 68.3% controlling stake in the combined entity. Airtel will have a 25% stake and Japan’s NTT Docomo, an existing Robi Axiata shareholder, will have a 6.3% stake. AZB & Partners advised Airtel on the transaction, while Allen & Overy advised Axiata.
The deal value was not disclosed, however TelecomFinance understands the total consideration was Rs120bn (US$1.85bn).
Airtel and Axiata were not immediately available for comment.
