Telecom major Bharti Airtel announced that the company will merge its Sri Lanka operations with Dialog Axiata, which is the largest telecom provider in Sri Lanka. The merged entity is expected to become the largest telecom provider in the country.

"Dialog Axiata Plc, Axiata Group Berhad, and Bharti Airtel Limited have entered into a binding term sheet to merge the operations of Bharti Airtel Lanka (Private) Limited, Airtel’s wholly-owned subsidiary with Dialog, a subsidiary of Axiata Group Berhad. The proposed transaction envisions Airtel being granted a stake in Dialog, representing the fair value of Airtel Lanka. Airtel would accordingly be issued new shares in Dialog upon completion of the transaction," the companies said in a joint statement.

Dialog accounts for 57% of the mobile market in Sri Lanka. The government-owned Mobitel acts as the second-largest telecom provider in the country, followed by Hutchinson Telecommunications. Hong Kong-based CK Hutchinson Holdings Limited holds a majority stake of 85% in Hutchinson Telecommunications, whereas Emirates Telecommunication Group holds a 15% stake in the company. Bharti Airtel, which started its operations in 2009 in Sri Lanka has a customer base of 1 million in the country. The company claims to have 4G and 5G networks across the country.

"Discussions with respect to the proposed transaction are currently taking place between the Parties and also with the relevant regulatory authorities as per applicable laws and regulations. The proposed transaction is subject to the signing of definitive agreements and necessary closing conditions including applicable regulatory and shareholder approvals," the statement said.

Following the announcement, shares of Bharti Airtel declined 0.55% to hit a low of 785.80 apiece on the BSE throughout the early trading session. The scrip opened higher at 792.80 against the closing price of the previous session at 790.15. The market capitalisation of the company stood at 1,92,994 crore at the time of reporting, with 8,270 shares exchanging hands on the BSE against the two-week average of 1.38 lakh shares. The company’s share price hit a 52-week high of 877.10 on November 25 last year, whereas it hit a 52-week low of 629.05 on July 14, 2022.

Earlier this week, the company entered into a strategic partnership with US-based Bridgepointe Technologies. The Airtel-Bridgepointe partnership will enable US enterprises interested in expanding to India and Africa to make use of Airtel’s digital infrastructure solution. Airtel has a consumer base of more than 500 million across 17 countries in South Asia and Africa.

In the December quarter of FY23, the company’s net profit jumped 91.5% year-on-year to 1,588 crore as against 830 crore in Q3 FY22. The company’s revenue from operations was up 19.9% YoY to 35,804 crore during the quarter under review compared with 29,867 crore in the corresponding period last fiscal. The average revenue per user (ARPU) for the quarter stood at 193 as compared to 163 in Q3 FY22.