Malaysia’s Axiata Group and India’s Bharti Airtel are discussing merging their operations in Sri Lanka to create a company serving half the country’s 25 million mobile connections.
Dialog Axiata, the market leader with 10.5 million connections and 41 per cent share, reportedly approached authorities last week about a possible takeover of Airtel Lanka, which has a 9 per cent share with 2.3 million mobile customers.
Since a merger would give Dialog more than a 50 per cent share of mobile connections, the country’s Competition Commission will no doubt review the consolidation move carefully.
Axiata and Bharti announced two weeks ago they will merge their operations in Bangladesh to create the country’s second largest player behind market leader Grameenphone. Axiata will hold a 68.3 per cent controlling stake in the merged company, while Bharti will hold 25 per cent. The remaining 6.7 per cent will be held by Japan’s NTT Docomo, which is an existing shareholder.
Sri Lanka has six mobile players, including number two Mobitel, which is run by state-owned Sri Lanka Telecom and has a 22 per cent share.
The government has set a minimum mobile tariff, which Dialog has matched, that has limited Airtel Lanka’s ability to compete with Dialog on price and boost its market share, the Economic Times said.