Axiata, Airtel to merge Bangladesh ops

Axiata will hold 68.3% controlling stake in the combined entity

Don't want to miss the best from Business Standard?

Axiata Group Berhad (Axiata) and Bharti Airtel will merge their telecom operations in Bangladesh. Both on Thursday signed a definitive agreement to merge their subsidiaries in Bangladesh — Robi Axiata Limited (Robi) and Airtel Bangladesh Ltd (Airtel).

Upon completion, Axiata will hold 68.3 per cent controlling stake in the combined entity, while Bharti will hold 25 per cent. The remaining 6.7 per cent will be held by the existing shareholder, NTT Docomo of Japan.

The proposed transaction is subject to conditions precedent including receiving applicable approvals from relevant authorities and is expected to complete in the first half of 2016, according to a statement from Bharti Airtel.

The agreement follows the announcement in September last year when they had entered into exclusive discussions to explore possibility of combining the business operations in Bangladesh.

Gopal Vittal, Managing Director and CEO (India and South Asia), Bharti Airtel said, “There is a compelling rationale for bringing together the strengths of both entities. The combined entity will be well positioned to leverage the operational synergies to serve customers better with world-class services and contribute to the growth of the telecom sector in Bangladesh.”    

Post-merger, the combined entity operating as Robi will serve approximately 40 million customers.

Airtel Bangladesh has a subscriber base of nine million, while Robi Axiata has 28 million subscribers. After the proposed merger, the combined entity will become the second-largest telecom service provider in Bangladesh in terms of number of subscribers.

Robi Axiata is currently the third largest telecom operator in Bangladesh, followed by Airtel. There are six operators in Bangladesh with Grameenphone leading the list.

The proposed merger is set to strengthen the industry structure, competitiveness and, more importantly, bring greater benefits to customers in terms of network quality and coverage and an improved offering of data products and services, the statement added.

It also said the customers will be rewarded through lower within-network (on-net) call rates by being part of the 40 million-strong base.

Supun Weerasinghe, Chief Executive Officer of Robi said, “The highly competitive and crowded Bangladesh telecom sector solicits consolidation and this merger will form greater economies of scale for both Groups. It will also result in shared investment capacity of the leading two industry players to optimise strategies and deliver enhanced value to consumers, benefitting the industry at large.”

Dato’ Sri Jamaludin Ibrahim, President and Group Chief Executive Officer of Axiata said, “In line with Axiata’s merger and acquisition strategy, in-country consolidation has been one of the Group’s key focus in solidifying its position, unlocking profitability of the market and ensuring long term growth. Axiata’s track record of successful strategic mergers and integrations in its other markets such as Indonesia, Sri Lanka and Cambodia further qualifies the Group to lead market consolidation in Bangladesh.”