Bharti Airtel to complete divestment of Bharti Airtel Lanka

Business

oi-Roshni

By Roshni Agarwal

Published: Tuesday, December 17, 2013, 12:45 [IST]

After discussing terms of the deal for more than 5 months and deciding on the broad aspects concerning the transaction, Bharti Airtel is likely to complete the divestment transaction of its operations in Sri Lanka with Etisalat. Etisalat is a telecommunication services company based in the UAE. Earlier, discussion for the sell-off deal was reported to be in advanced stage in the month of August. And Standard Chartered Bank was said to be the financial intermediary assisting in the deal.

Bharti Airtel, a prominent telecommunication services player in the Indian markets, began its operations in Sri Lanka in the year 2009, providing services including, 2G, 3G and 3.5G in all of the 25 districts With huge investment in excess of $300 million for its venture in the Sri Lankan market, the company failed to garner competitive market share with a customer base of less than 2 million.

Bharti Airtel's consolidated net profit declined 29% to Rs 512 crore on 9.9% growth in net sales to Rs 21324.40 crore in Q2 September 2013 over Q2 September 2012. "The Sri Lankan operation has been a cash guzzler for Bharti" remarked one of the person acquainted about the development.

The decision in respect of the divestment has also been prompted by unfair regulations in the country owing to which Airtel confronted interferences in matters of frequencies. Further, the system did not allowed the company to be flexible in respect of tariffs.

The divestment of the operation in Sri-Lankan market to Etisalat would boost market share as well as ranking of the latter to second position that currently holds third position in Sri-Lanka.Justifying the acquisition by Etisalat, one of the person aware of the development was quoted in The Economic Times report saying "In a country like Sri Lanka, an operator has to be either the largest or the second-largest to make money".

The deal is likely to be announced before the beginning of the new year. However, financial consideration for the divestment is not known.

GoodReturns.in