Bharti Airtel, Malaysian Axiata Group may merge Sri Lankan units

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Bharti Airtel and Malaysia’s Axiata Group are mulling over a merger of their operations in Sri Lanka, in a share-swap deal, to create a company serving half the country’s 25 million mobile connections, according to an ET report.

Axiata Group’s Sri Lankan unit Dialog Axiata is the market leader with 10.5 million connections and 41% share, whereas Airtel Lanka has a 9% share with 2.3 million mobile customers. Mobitel, which is run by state-owned Sri Lanka Telecom, has a 22% in the country, followed by Etisalat.

The development follows the recent merger of Airtel and Axiata's telecom units in Bangladesh, wherein Axiata will be the dominant shareholder and Airtel a strategic minority holder in the combined entity. This merger will allow Airtel Bangladesh and Robi Axiata to leverage their operational synergies.

Dialog Axiata reportedly approached Sri Lankan authorities last week about a possible takeover of Airtel Lanka, the report said, adding the Competition Commission of Sri Lanka may have some issues with a potential merger since Dialog Axiata already controls over half the country's mobile market.

Airtel Lanka hasn't been able to effectively compete with Dialog and boost market share in Sri Lanka due to minimum mobile tariff set by the government, ET report said, citing multiple sources.

Besides India, Airtel has operations in 19 countries across Asia and Africa, with a total of 350 million users as on December 31, 2015.

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