Airtel, Axiata subsidiaries merger credit positive: Moody's

The merger of subsidiaries of Bharti Airtel and Axiata Group in Bangladesh is credit positive for both the companies, Moody's Investors Service said today.
On January 28, Bharti Airtel Limited (Baa3 stable) and Malaysia-based Axiata Group Berhad (Baa2 stable) announced that they had agreed to merge their telecom subsidiaries in Bangladesh.
Airtel Bangladesh is wholly owned by Bharti Airtel and Robi Axiata Limited is 91.59 per cent-owned by Axiata and 8.41 per cent-owned by Japan's NTT Docomo.
"The merger, which requires regulatory approval, is credit positive for both Bharti Airtel and Axiata," Moody's said in a statement.
The merger, which the companies expect to conclude in the first half of the year, will be structured via issuance of ordinary shares, whereby Robi will issue new ordinary shares to Bharti Singapore, a wholly-owned subsidiary of Bharti Airtel.

After completion of the merger, the companies expect that Axiata will own 58.7 per cent of Robi-Airtel, Bharti Airtel will have 25 per cent and NTT 6.3 per cent, it added.

Moody's said the new entity, Robi-Airtel, will have a stronger market position than either Robi or Airtel has on a standalone basis in Bangladesh's highly competitive mobile telecommunications market.
Also, it said, the merger will ultimately enhance network quality and coverage and allow operational synergies without adversely affecting the credit quality of either Bharti Airtel or Axiata.
"We do not expect Bharti Airtel's and Axiata's metrics to be significantly affected by the merger because the contribution from their respective Bangladeshi subsidiaries is relatively small," it said.