New push for Robi's merger with Airtel

The Malaysian High Commission in Dhaka is pursuing the telecom regulator on the proposed merger of Robi and Airtel, saying the move will further strengthen relations between the two countries' business communities.

"We truly believe your decision in favour of the merger would encourage potential Malaysian investors to further invest in Bangladesh and would certainly have a positive impact in attracting more foreign investment in the country," reads the letter signed by Ahmad Fikri Zakian, second secretary of the high commission.

The merger will allow Robi to lend a strong hand in realising the vision of a Digital Bangladesh, according to the letter.

Bangladesh Telecommunication Regulatory Commission received the letter in the first week of March, just before Malaysia halted the recruitment of new foreign workers, including 15 lakh Bangladeshis.

On January 28, the parent companies of Robi and Airtel signed a merger deal that would make the combined entity the second largest operator in Bangladesh.

They began merger talks in August last year and got the primary approval with some conditions from the regulator a month later.

Without mentioning Grameenphone, the letter said the competition in the market is heavily in favour of the leading operator and it is difficult for Robi and Airtel to separately sustain the heavy investment considering their market share.

"Both Axiata Group and Bharti Airtel believe that combining their businesses will form greater economies of scale for both groups and will definitely enhance the value and services to the consumers as well as to the industry at large."

Recently, several banks, the Federation of Bangladesh Chambers of Commerce and Industry, international gateway (IGW) operators, and interconnection exchanges (ICXs) sent letters to the BTRC to express support for the merger.

Meanwhile, the BTRC organised a public hearing for the opinions of different stakeholders. The telecom watchdog also conducted two separate market studies to gauge the socio-economic implications of the merger.

The big losers from this merger will be the ICXs, as inter-operator call minutes will drop, said a senior official of the BTRC.

The BTRC gets 67.25 percent of the total earnings of the ICX; currently, the ICX market size is about Tk 1,000 crore, which is increasing by the day.

However, Jibondhara Solutions Ltd, a major ICX operator in the market that supported the merger initiative and sent a letter to the BTRC, said the inter-operator call minutes between Robi-Airtel is not a big chunk and it will not impact the industry.

"On the other hand, this initiative can help mature the market," said Zahir Ahmed, chief executive of Jibondhara.

SM Mahfuzur Rahman, a professor of Dhaka University, said in his study: "The merger may cause short-term losses but in the long run, this will provide operational stability as well as growth in business and revenue."

Several senior officials related to the merger process also raised questions about the responses received by the BTRC.

"We got around 40 letters from different stakeholders and all recommended the merger positively. But surprisingly, the language and style used in all the letters are similar," said an official.

In another letter, DigiCon Telecommunication Ltd, a major IGW operator, said it believes that the consolidation of Robi and Airtel will boost investments for the next generation of mobile infrastructure and deliver mobile broadband to remote areas.

"The efficiency and investment benefits of the merger will enable innovation and help build consumer confidence in the existing mobile services," said the letter signed by Md Monwar Hossain, chief technology officer of DigiCon.

HSBC Bangladesh, in another letter signed by its two senior officials, said: "We find this merger to be sending a positive signal to the national and international market. Naturally, it will help in stimulating interest among the investments in the economy, which is always good news for the financial sector."

In the merged entity, Axiata, the parent company of Robi, will hold a 68.7 percent controlling stake, Bharti Airtel 25 percent and Japan's NTT DOCOMO 6.3 percent.

As of January 2016, Robi's active subscriber base stood at 2.78 crore and Airtel's 1.06 crore. Market leader Grameenphone has 5.62 crore subscribers, according to the BTRC.