KUALA LUMPUR (Jan 28): Axiata Group Bhd is planning to merge its 91.59%-owned unit, Robi Axiata Ltd, with India's Bharti Airtel Ltd's subsidiary Airtel Bangladesh Ltd to strengthen Axiata's position in the mobile internet segment in Bangladesh.

The proposed merger will also consolidate Axiata's position as the second largest operator in Bangladesh, according to Axiata's statement today.

Axiata has signed the definitive agreement with Bharti Airtel to effect the proposed merger, which came about after discussions between the two to explore the possibility of combining the two units, which was announced on Sept 9, 2015.

The newly merged entity, Robi, will serve approximately 40 million customers, delivering the widest mobile network coverage in the country, said Axiata.

The proposed merger will be satisfied through the issuance of new ordinary shares of BDT10 each in Robi, by Robi, to Bharti Airtel, for a shareholding of up to 25% plus one Robi share, on a fully diluted basis of the combined entity of Robi and Airtel Bangladesh.

Post-merger, Axiata will hold 68.3% in the combined entity, while Bharti Airtel will hold 25%. The remaining 6.7% will be held by Robi's existing shareholder, NTT DoCoMo of Japan.

The proposed transaction is expected to be completed in the first half of 2016, after receiving approvals from relevant authorities.

"The highly competitive and crowded Bangladesh telecommunications sector solicits consolidation and we believe this merger will form greater economies of scale for both groups.

"Additionally, it will result in shared investment capacity of the leading two industry players to optimise strategies and deliver enhanced value to consumers, benefitting the industry at large," said Robi chief executive officer (CEO) Supun Weerasinghe.

Axiata president and group CEO Datuk Seri Jamaludin Ibrahim said the move was in line with the group's merger and acquisition strategy, as in-country consolidation is a key focus for the group to ensure long-term growth.

"Axiata's track record of successful strategic mergers and integrations in its other markets such as Indonesia, Sri Lanka and Cambodia further qualifies the Group to lead market consolidation in Bangladesh," he said.

Axiata shares fell 52 sen or 8.5% to close at RM5.59, bringing it a market capitalisation of RM53.87 billion.

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