Dialog Axiata to take over Airtel Lanka in long-awaited merger deal

Dialog Axiata to take over Airtel Lanka in long-awaited merger deal

Dialog Axiata and its parent company Axiata Group announced on Thursday that they have signed a definitive agreement to effectively take over Bharti Airtel’s Sri Lankan operations, reducing the number of mobile operators in the country to three.

Under the merger deal, Dialog will acquire 100% of issued shares in Airtel Lanka, then give Bharti Airtel ordinary voting shares via a share swap, which will allow Airtel to retain a 10.35% stake in the combined company. No financial details have been disclosed, and no timeline has been given.

While the deal remains subject to approval of Dialog's shareholders and the usual legal, corporate and regulatory compliance procedures – to include clearance from the Colombo Stock Exchange (CSE) – the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) has already given its blessing.

Axiata said the merger – which has been in the rumor mill for years and officially in the works since May 2023 – will enable it to leverage economies of scale and reduce duplication of infrastructure, as well as save costs and improve operational efficiencies.

“This merger brings together the strengths of two leading telco groups and bodes well for the growth and sustainability of Sri Lanka's flagship telecom sector,” said Dr Hans Wijayasuriya, Axiata’s group executive director and CEO of its telecommunications business.

Axiata Group CEO and MD Vivek Sood said the deal aligns with Axiata's strategy of market consolidation and resilience. “The merger will create value for the shareholders of Dialog Axiata PLC and Axiata Group through achievable synergies.”

It will also further solidify its market share. Dialog already leads the market with an estimated 57% share with close to 18 million subscribers. Airtel Lanka will add another estimated 5 million to Dialog’s subscriber base.

The merger deal comes as Sri Lanka’s telecoms sector has been impacted by the country’s recent economic crises. According to the latest market report from BuddeComm, operators are struggling to make enough revenue to keep up with the cost of network upgrades. Meanwhile, overall subscriber numbers have dropped 3.1% in 2023 up to September. The government hasn’t helped by increasing both the Telecoms Levy and the value added tax on mobile devices.

The deal leaves Sri Lanka with just three mobile operators, the other two being SLT-Mobitel and Hutch Lanka, who will rank second and third, respectively, once the Dialog-Airtel merger is complete. It’s also the second big mobile consolidation deal in Sri Lanka since Hutch Lanka merged with Etisalat Lanka in 2018.

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