Axiata Group and Bharti Airtel are merging their Bangladeshi units to push the combined venture into second place in the market.
Grameenphone takes the top spot in Bangladesh with a 42% market share, but the proposed merger of Robi Axiata and Airtel Bangladesh – branded as Robi – would have a combined 39 million customers, giving it 28% market share and taking it ahead of current number two Banglalink, which has 24.5%.
Currently, Robi Axiata has 28.3 million connections, giving it a market share of 21%. Airtel meanwhile has around 10 million connections for a 7.4% share, and takes fourth of eight places. The remaining four operators collectively share less than 5% of the market.
Indian firm Bharti first hinted at the possibility of selling its Bangladeshi unit in August 2015, and the following month it began talks with Malaysia’s Axiata over a potential merger between their subsidiaries in the market. The agreed deal is subject to regulatory approval but is expected to close in H1 2016.
Axiata will take the majority holding in the newly-created Robi, with a 68.3% stake compared to Bharti’s 25%. Existing shareholder NTT Docomo will take the remaining 6.7%.
While mobile adoption is strong in Bangladesh, the market is somewhat overcrowded and fiercely competitive; as Robi CEO Supun Weerasinghe remarked, it “solicits consolidation and we believe this merger will form greater economies of scale for both groups”.
Combining the two units will help to improve competitiveness by augmenting network quality and extending coverage, as well as strengthening Robi’s data products and services offering. Gopal Vittal, Bharti Airtel’s managing director and CEO of India and South Asia, said that Robi will be “well positioned to leverage the operational synergies to serve customers better”.