Bharti Airtel in talks to sell its Lankan operations to Etisalat

23 August 2013 04:11 am - 12     - {{hitsCtrl.values.hits}}

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Bharti Airtel, the world's fourth largest telecom operator by subscribers, is in advanced discussions to sell off its Sri Lankan operations to Abu Dhabi's Etisalat, said two persons aware of the development.

According to one such person, Standard Chartered Bank is advising the Indian company in the transaction. Bharti AirtelBSE -2.60 % Lanka, which has a subscriber base of 1.7 million, has been valued between $110 million and $130 million. Etisalat is Sri Lanka's third-largest operator with 4.5 million subscribers and it will move up to the second spot if the deal goes through.

Responding to a questionnaire on the sale of its operations to Etisalat, Airtel said as a policy it didn't respond to market speculations. Standard Chartered declined comment while Etisalat could not be reached for comments. Sri Lanka reportedly has an addressable mobile market of about 22 million, with penetration levels of around 85%.

"In a country like Sri Lanka, an operator has to be either the largest or the second-largest to make money," said the second person aware of the development, while explaining why the deal was important for the Abu Dhabibased operator. Airtel's growth prospects in the island nation, on the other hand, were limited as it just had 1.7 million subscribers.

The company's subscribers have not grown in the past four quarters and despite investing over $300 million since 2007, the unit continues to make losses. "The Sri Lankan operation has been a cash guzzler for Bharti,'' said the first person.

While Bharti Airtel doesn't report the financial numbers for Sri Lanka separately, sources told ET that the company had posted revenue of Rs 320 crore for the quarter ended June 2013 and a net loss of Rs 190 crore.

The company, which entered the Sri Lankan market in 2009 as the country's fifth operator, offers 2G, 3G and 3.5G services in the island nation across all the 25 districts and it has built a distributor network of 40,500 retailers.

With a small population, the Sri Lankan market turned out to be a difficult game for India's largest telecom operator whose foray had begun with stiff resistance from the local operators in 2009.

Fearing the size and scale of Airtel's operations, incumbent operators had resisted giving interconnection to it, a trouble which later resolved. Airtel's operations were later mired in controversy as it tried to launch a price war in the market, which was later thwarted by the telecom regulator for being anti-competitive. (Source: The Economic Times)
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  Comments - 12

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  • zeylanicus Friday, 23 August 2013 06:01 PM

    It was an unfair game. Dialog got permission to give the very low cost 'Blaster' packages, Mobitel go permission to give 'Upahara'. But when Airtel tried to give such packages they were not allowed. In order to protect the profits of some players the benefit that the consumer could have received was sacrificed.

    Gus Gemba Friday, 23 August 2013 06:04 AM

    No one can compete against Dialog in Sri Lanka!

    lal Saturday, 24 August 2013 12:00 AM

    We all came from different parts of India our forefathers via DM iPad app

    seneka Friday, 23 August 2013 10:23 AM

    lord Buddha also cam from India

    nalaka Friday, 23 August 2013 04:19 AM

    so airtel agree that they are a gadol

    RT Saturday, 24 August 2013 02:47 AM

    customers sacrificed, youth package of airtel was very popular as it brought down rates from 5 to 1, now rates will start going up again

    Justice Seeker Friday, 23 August 2013 04:38 AM

    What did i just read? Somebody wake me pouring some water please.

    chams Friday, 23 August 2013 04:39 AM

    Airtel become a GADOLLL their own ...

    Athula Friday, 23 August 2013 04:45 AM

    As usual with their silly tactics, now Mobitel will try to buy hutch....!!!
    anyhow experts talks are always correct.
    "Three mobile operators are maximum for Sri Lanka"

    narakakolla Friday, 23 August 2013 04:55 AM

    It only helped to cut down Dialog rates back in 2009.

    pissu Saturday, 24 August 2013 09:15 AM

    good one

    lionheart Friday, 23 August 2013 05:03 AM

    Very Good News. Another Indian company attempting to exploit Sri Lanka, bites the dust. Hope people stop buying indian maruti's, 3 wheelers and tata and ashok leylend trucks too.....If India cannot respect SL, to hell with thier business interests.


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