Robi, Airtel in merger talks
Robi and Airtel opened talks on a possible merger to become the country's second largest mobile phone operator after Grameenphone.
Malaysia-based Axiata Group, the majority owner of Robi, and India's Bharti Airtel, owner of Airtel Bangladesh, yesterday released a joint statement on the matter.
Robi is the number three operator by subscribers but the second largest in terms of revenue. Airtel is the fourth largest mobile operator in Bangladesh in terms of subscribers and revenue.
Axiata Group and Bharti Airtel signed an agreement about the merger talks in the last week of August in Kuala Lumpur, according to a senior official of Robi.
The merged entity, which will operate under the brand name of Robi, will be 70 percent-owned by Axiata Group, Malaysia's largest carrier.
Bharti Airtel will have 25 percent stakes in the new company. Shares of Japan's NTT DOCOMO in Robi will be diluted to 5 percent from 8.41 percent now.
The merger is expected to be complete by January, the Robi official said.
Before that, approval must be taken from the Bangladesh Telecommunication Regulatory Commission.
“Before giving it the go-ahead, we will examine what the market situation will be after the merger,” said BTRC Chairman Sunil Kanti Bose. In fiscal 2013-14, Robi's gross revenue was Tk 4,672 crore and Airtel's Tk 1,713 crore, according to the telecom regulator's annual report.
Robi has been logging in profits for three consecutive years now.
As of July, Robi's customer base stood at 2.79 crore and Airtel's approximately 91 lakh.
The combined entity will have the second largest subscriber base in Bangladesh. Grameenphone, the largest operator, has 5.3 crore subscribers.
If the deal gets through, Banglalink, the second largest operator with 3.2 crore subscribers, will come under tremendous pressure from competitors. In the intensely competitive telecom markets of South Asia, an acquisition or merger should not raise any big red flag, said Rohan Samarajiva, chief executive officer of LIRNEasia, a Colombo-based telecom think-tank.
Even with the reduction of one player, the concentration levels should still be lower than in most developed country markets, he said, adding that the customers have no reason to worry about the merger.
“What requires attention is spectrum, especially in light of the convoluted rules that were applied in giving operators spectrum at various times,” Samarajiva said.
In the statement, both the parties said there is no certainty that this discussion will lead into the execution of binding definitive agreements between the parties.
The announcement is to facilitate the ongoing discussions and exchanges of information between the parties, including, but not limited to, discussions with the relevant regulatory authorities, it said.
Axiata and Bharti Airtel will issue further announcements if there is any material development on the matter.
Airtel entered Bangladesh in 2010 by acquiring a 70 percent stake in Warid Telecom, picking up the remaining 30 percent in 2013. Its licence expires in 2018.
Robi started operations in 1997 under the brand name of AKTEL. The operator renewed its licence in 2011 after completing its first 15-year tenure. In Bangladesh, Robi employs 1,800 people and Airtel 800.
The new entity will apply for a combined licence soon after the merger.