Bharti Airtel signs deal to merge Sri Lankan unit with Dialog Axiata

Airtel Lanka to have 10.35% voting shares in the merged entity, according to agreement

Bharti Airtel said on Thursday it has signed an agreement to merge the operations of its Sri Lankan unit with Dialog, the island nation’s largest telecom provider and a subsidiary of Malaysia’s Axiata Group Berhad.

Dialog will acquire 100 per cent of the issued shares in Airtel Lanka. In return, Airtel Lanka will be granted a stake in Dialog. "Dialog will issue to Bharti Airtel, ordinary voting shares which will amount to 10.35 per cent of the total issued shares of Dialog by way of a share swap," said Bharti Airtel in a press release.

Bharti Airtel Lanka, a wholly-owned subsidiary of the Indian telecom giant, began commercial operations in Sri Lanka in 2009. Bharti Airtel announced initial plans to merge in May last year. On Thursday, it said the transactions remain subject to the approval of Dialog's shareholders and are pending the completion of specific conditions outlined in the Share Sale Agreement. Clearance from the Colombo Stock Exchange (CSE) and completion of other applicable compliance procedures will also have to be completed.

“We are happy to merge our Sri Lankan operations with Dialog. Given the scale and unique propositions they offer, we are certain that our customers will continue to enjoy cutting-edge services on a seamless network,” said Gopal Vittal, managing director (MD) and chief executive officer (CEO) of Bharti Airtel.

The merger helps Axiata’s strategy of market consolidation and resilience, said Vivek Sood, Group CEO and MD of Axiata Group Berhad. "We have the utmost respect for Airtel Lanka and its employees and look forward to working together as we integrate the two companies,” he said.

Merging Sri Lanka operations with Dialog is expected to give Airtel access to a larger user base. SLT-Mobitel, which is majority government owned, is the second-largest player in Sri Lanka’s telecom market. Hutchison Telecommunications Lanka, formed by a merger between Hong Kong's CK Hutchison Holdings Limited and UAE-based Etisalat in 2018, is the third largest player.

Bharti Airtel Lanka was the fastest operator to reach 1 million customers. The company said its technological innovation helped rapid telecom adoption among Sri Lanka's youth. Its offerings include the lowest rates for voice services, per second billing, the lowest international direct dialling rates, and the lowest international voice and data roaming rates.

Bharti Airtel Lanka’s 5G-ready 4G network was rolled out in July 2021, said the press release. It is boosting capacity and held latest trials for 5G technology over a commercial network, achieving download speeds of over 1.9Gbps – the highest recorded in the country to date.

According to the International Telecommunications Union, Sri Lanka had 31.23 million subscribers as of 2022, and mobile network coverage was 99 per cent.

Dialog began 5G trials last year. However, Sri Lanka’s economic crisis, political situation, and an increase in telecommunication levy from 11.25 per cent to 15 per cent for operators are likely to future 5G rollouts, said the Union.