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Airtel extends talks with Robi Axiata to merge operations in Bangladesh

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Bharti Airtel and Robi Axiata, which earlier had signed an agreement to merge their operations in Bangladesh has extended the period of agreement until September 26, 2016 or until both companies come to a permanent agreement, Airtel said in a notification to BSE. According to the deal, Axiata will hold 68.3% controlling stake in the combined entity, while Bharti will hold 25%. The remaining 6.7% will be held by the existing shareholder, NTT DOCOMO of Japan.

Follow the signing of agreement in January, Bangladesh’s Ministry of Posts, Telecommunication & Information Technology said that the merged entity of Airtel and Robi will have to pay an additional $62.4 million in fees for using Airtel’s existing spectrum in the 1800MHz band, along with other regulatory charges and fees, as pointed out by this Daily Star report. The additional charge is meant to adjust value of older spectrum bought by Airtel in 2005, when compared to costlier spectrum allocated to it in 2011, the report added.

Following the merger, Robi Axiata is expected serve approximately 40 million customers and will overtake Banglalink Digital Communications as the second largest telecom company in Bangladesh. Note that the extension of agreement period for the impending merger follows exclusive talks between Airtel and Robi Axiata in September last year.

Airtel entered Bangladesh by acquiring 70% stake in Warid Telecom in 2010, while in 2013, it picked up the remaining 30% too. In addition, Robi’s parent group, Malayasia-based Axiata Group Berhad, also owns 19.79% stake in Idea Cellular.

Airtel’s Bangladesh operations and financials

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Airtel reports its Bangladesh and Sri Lanka operation under a South Asia head. At the end of March quarter (Q4 FY15), Airtel’s network was present in 64 districts with a distribution network comprising of 160,000 retailers across Bangladesh. The company also claims to have more than 2,700 3G sites across the country.

In the same quarter, revenue from the region stood at Rs 438.8 crore, an increase of 18% when compared to Rs 370.6 crore in the same quarter last year. Revenue from data services grew by 64% to Rs 78.5 crore in Q4 FY15 when compared to Rs 47.8 crore in the same quarter last year.

Data revenue represented 17.9% of mobile revenue during the same quarter as compared to12.9% in the corresponding quarter last year. Data customers represented 28.7% of the total customer base in Q4 FY15 as compared to 25.5% in the same quarter last year.

Robi Axiata’s Bangladesh operations and financials

For the first quarter of 2016 (Q1 2016), Robi Axiata reported revenues of 11,835 million BDT (Bangladesh Taka), a decrease of 2.69% from the corresponding quarter last year. Data revenue contributed 12% of the total revenue. Robi Axiata reported a profit after tax of 397 million BDT, a fall of 57.17% from the same quarter last year.

Image credit: Arti Sandhu under  CC BY SA 2.0

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