Bharti Airtel and Malaysia-based Axiata Group will be merging their operations in Bangladesh to form the second largest operator in that country.
Axiata Group Berhad and Airtel today signed a definitive agreement to merge their respective telecom subsidiaries -- Robi Axiata Ltd and Airtel Bangladesh Ltd -- in Bangladesh, Airtel said in a statement.
According to industry sources, the enterprise valuation of the merged entity is estimated to be around USD 2 billion.
Upon completion of the merger, Axiata will hold 68.3 per cent controlling stake and Bharti Airtel 25 per cent, while the remaining 6.7 per cent will be held by the existing shareholder NTT Docomo of Japan.
The proposed transaction is subject to conditions precedent including receiving applicable approvals from relevant authorities and is expected to complete in the first half of 2016.
The agreement follows the September 9, 2015 announcement of both parties entering into an exclusive discussion to explore possibility of combining the business operations in Bangladesh.
Post-merger, the combined entity operating as Robi will serve approximately 40 million customers.
"The joint strengths of Robi and Airtel will deliver the widest mobile network coverage across Bangladesh, strengthening its position in the mobile internet segment as well as consolidating its position as the second largest operator in the country," the company added.
Airtel had entered Bangladesh by acquiring 70 per cent stake in Warid Telecom in 2010, and it picked up the remaining 30 per cent too in 2013.
"The highly competitive and crowded Bangladesh telecommunications sector solicits consolidation and we believe this merger will form greater economies of scale for both Groups," Robi CEO Supun Weerasinghe said.
The merger will result in improving the cost of operations and business viability that will lead to greater returns to the shareholders resulting in the ability to further invest towards expansion of services.
"Axiata's track record of successful strategic mergers and integrations in its other markets such as Indonesia, Sri Lanka and Cambodia further qualifies the Group to lead market consolidation in Bangladesh," Dato' Sri Jamaludin Ibrahim, President and Group CEO of Axiata said.
Bharti Airtel MD and CEO (India and South Asia) Gopal Vittal said the combined entity will be well positioned to leverage the operational synergies to serve customers better with world-class services and contribute to the growth of the telecommunications sector in Bangladesh.