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Update: Airtel Bangladesh, Robi Axiata merger deal gets final approval

Airtel 4G

Update: (N0v 16) The merger deal receives final approval from Bangladesh’s Registry of Joint Stick Companies. Post merger, Robi Axiata will hold a 68,7% stake in the merged company, while Airtel will hold 25%; the remaining 6.5% stake will be owned by NTT Docomo, according to Airtel’s filing with the BSE.

The Bangladesh High Court (HC) has provided Robi Axiata a 4-week extension for registering the scheme of arrangement regarding its merger with Airtel Bangladesh, the company informed the stock exchanges. Note that Robi Axiata had earlier received Bangladesh HC approval in September; the company will now have to register the merger scheme with Bangladesh’s Registry of Joint Stick Companies (RJSC) for further approval.

Both companies announced their intention for a merger deal in September last year and signed a non-definitive exclusive agreement in January 2016. The time-period of the exclusive agreement was then subsequently extended in June by Airtel until September 26, 2016 or until both companies come to a permanent agreement.

Following this, Bangladesh’s telecom regulator and higher ministry proposed that the merged entity of Airtel and Robi may have to pay and estimated $62.4 million in fees for using Airtel’s existing spectrum in the 1800MHz band in Bangladesh, as pointed out by this Daily Star report. The additional charge was proposed by Bangladesh’s regulator to adjust value of older spectrum bought by Airtel in 2005, when compared to costlier spectrum allocated to it in 2011.

Merged co to pay $75 million in regulatory charges: Bangladesh HC

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While receiving approval from Bangladesh court in September, Axiata said in a statement to the exchanges that regulatory charges for difference between the spectrum prices paid by Airtel is fixed at ~$65 million (BDT507 crore) as opposed to the originally proposed $62 million. The amount will be paid by the final merged entity and Bangladesh telecom regulator even proposed an installment structure for the same amount.  In addition, the merger entity will also have to pay ~$12.8 million (BDT 100 crore) in other regulatory charges taking the total amount to over $75 million

The court upheld these charges, while it added that the “Proposed Merger is also subjected to fulfilment of other conditions stipulated in the Agreement and is expected to be completed in the fourth quarter of 2016”. It also provided an extension of the earlier signed non-binding agreement up till 31st December 2016.

However, TheStar pointed out that during Axiata’s AGM meeting, its Group CEO Datuk Seri Jamaludin told media that “We (the company) will not proceed with the whole merger based on the earlier asked (amount).” He added that Axiata would not be in a position to proceed the merger if the fees weren’t within a particular limit. Also note that in its statement to stock exchanges, Axiata did not conclude whether it would appeal to the court to lower the charges.

 

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