Last month, Bharti Airtel's Sri Lankan business announced a play to become the largest player in the country's telecom market, up from the current fourth position.
It disclosed talks were on for a merger of operations with Dialog Axiata, the largest telecom service provider in Sri Lanka's market of 31 million subscribers.
Bharti Airtel has been tightlipped about the developments, but sources said the proposed transaction would grant its wholly owned subsidiary, Bharti Airtel Lanka, a stake in Dialog.
A subsidiary of Malaysian multinational telecom conglomerate Axiata Group Berhad, Dialog has dominated the telecom space for the past decade in Sri Lanka. With 174 million subscribers at the end of FY24, it accounts for 57 per cent of the country's mobile market.
Meanwhile, Bharti Airtel Lanka has struggled in recent years to expand the customer base in a market where service penetration has reached 99 per cent. While market share figures for Bharti Lanka were not readily available, it is the fourth-largest player in the sector in terms of active subscribers, according to market estimates. Although it was the fastest operator to reach one million customers, competitive tariffs have meant stagnant user additions.
Majority government-owned SLT-Mobitel and Hutchison Telecommunications Lanka, formed as a result of a merger between Hong Kong-based CK Hutchison Holdings Limited and United Arab Emirates-based Etisalat in 2018, are the second- and third-largest telecom service providers, respectively.
So the merger is expected to give Airtel access to a much larger user base and make it the largest telecom provider in the country.
Sources said the latest merger proposal was a result of multiple years of talks. Both companies had first evinced interest for combining operations in 2016, in line with Bharti Airtel's merger with Axiata's Bangladesh arm.
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