Banglalink, AKTEL may merge

Mobile operators Banglalink and AKTEL are in talks for a possible merger in an aggressive bid to grab a substantial market share of Bangladesh's 46 million market, giving a hint that the number of operators will come down in the already saturated six-operator market.

The merger issue was disclosed by Orascom Telecom Holdings Chairman Naguib Sawiris recently, when he talked with journalists on the sidelines of the World Economic Forum in Jordan, according to media reports.

Sawiris said mobile operators would benefit from merger because "in long term the smaller companies won't be able to compete".

"But right now our feeling is that more consolidation has to happen in the market on the subsidiary level, like we're doing in Bangladesh. We're in discussions now with Telekom Malaysia to combine our operations," he said.

Orascom Telecom Holdings is the owning company of local Banglalink, which is yet to break even after holding the market's second largest position with 10.90 million customers as of April 2009.
Banglalink's probable consolidation partner AKTEL has the third position in the market with 8.83 million subscribers as of April.

Telekom Malaysia International has 70 percent stake and Japanese NTT DoCoMo the rest in AKTEL.

If the expected merger happens, the new operator's market share will be around 45 percent in terms of accumulated customers of 19.73 million.

At present, the top three operators -- Grameenphone, Banglalink and AKTEL -- hold more than 90 percent market share. Norwegian Telenor's majority shareholding company Grameenphone is in the number one position with 46 percent market share and 21.02 million customers as of April 2009.

Sawiris' recent disclosure about merger matches the hint he had given to the journalists during his visit to Dhaka last year.
In a press meet in Dhaka he was asked about the possibility of acquisition and merger in Bangladesh's cellphone market. He said: "Frankly speaking you have six operators, but we see only three."

He however said: "Most competitors don't want to sell unless they have built some value. And that's why we don't see someone wants to sell its stake right now. But I believe six is a crowd."
Talking to The Daily Star, a Banglalink official said it could happen as Sawiris told the press.

"There is something going on. But we are not fully aware of the development."

AKTEL officials echoed the same, saying they also heard about the issue but Telekom Malaysia International is yet to give any hint to the AKTEL office.
Talks of merger, acquisition or a new partnership in the telecom industry surfaced over the last few years, as most operators have failed to gain profitability.

Only Grameenphone now enjoys break-even. AKTEL remained profitable until the end of 2007. But then the company became a losing concern even after having a new partnership with Japanese NTT DoCoMo at the end of 2008.

Top officials of the leading mobile phone operators are already anticipating that a merger or acquisition will take place. However such talks were centring around the bottom three operators earlier.

So any merger among the leading operators will change the market's characteristics and fuel competition, experts said.

"We had mentioned earlier that for the six operators in this market it would be difficult to sustain. So it comes as no surprise that the two companies now are in discussions. Whether there will be a merger or not remains to be seen," Oddvar Hesjedal, chief executive officer of Grameenphone, told The Daily Star yesterday.

He said: "If it becomes a reality, Grameenphone will do its best to be a worthy competitor. We are confident that we will remain as the number one operator in Bangladesh in the years to come.”

Warid Telecom, the fourth largest operator, said recently it was on the lookout for a partner to raise fresh capital for investment in the next phase of its operations.