Sri Lankan telco Dialog Axiata announced a share purchase agreement to buy local wireless fixed line operator Suntel for US$34m. The transaction, which is scheduled to be completed within the next few months, will see Suntel being merged with Dialog…
Sri Lankan telco Dialog Axiata announced a share purchase agreement to buy local wireless fixed line operator Suntel for US$34m. The transaction, which is scheduled to be completed within the next few months, will see Suntel being merged with Dialog Broadband Networks, the fixed-line subsidiary of Dialog Axiata.
The transaction value is equivalent to approximately 3x EBITDA. JP Morgan and Macquarie Capital acted as financial advisers on the transaction.
Suntel managing director, Jeremy Huxtable, said in a statement that, after 15 years of robust growth, the Sri Lankan telecommunications industry required consolidation. The country is currently populated with four fixed-line operators: Sri Lanka Telecom, Suntel, Lanka Bell, and Dialog Broadband.
Dialog, a subsidiary of Malaysia’s Axiata Group, expects the merger to create the nation’s second-largest fixed access provider in terms of customers, with a 23% market share.
Suntel, a subsidiary of Sweden’s Overseas Telecom, has been on the market for some time. In 2008, Indian network operator Tata Comm (TCL) tried to buy Suntel for US$90m but was outbid by Indian state-owned Mahanagar Telephone Nigam (MTNL), which submitted a US$180m offer. But the company later had to pull out of the deal due to legal issues.
UAE’s Etisalat also reportedly submitted an offer in the past.
More recently, a few months ago, Sri Lanka Telecom and Dialog Axiata both denied there were looking to acquire a stake in Suntel.
This is despite both companies having carried out due diligence on Suntel. But according to Sri Lanka’s Daily Mirror, Dialog has now managed to resolve the pricing and regulatory issues that prevented it from acquiring the company in the past.
