SLT Mobitel goes to Court challenging the merger of Dialog and Airtel
By: Staff Writer
Colombo (LNW): SLT Mobitel has gone to courts opposing the proposed merger of Dialog and Airtel citing the latter is monopolistic and would seriously jeopardise its viability.
The sale of SLT Mobitel’s majority stake of 50.23% stake has hit a roadblock in view of the State controlled firm’s mobile brand taking the Telecommunications Regulatory Commission (TRC) to Court opposing the proposed merger of Dialog and Airtel.
Early this month, the Finance Ministry issued Request for Qualification (RfQ) from interested parties to acquire a 50.23% stake in Sri Lanka Telecom (SLT).
The invitation to pre-qualify and bid for SLT is now on. Analysts said the on-going litigation which highlights possible loss of mobile telecom business of State-controlled entity, would impact the valuation of SLT.
This notice in November however came despite Mobitel in late June challenging the proposed merger between Dialog and Airtel in Sri Lanka and possible combination of spectrum estimated at 52% of allocated spectrum as illegal; wrongful; and unlawful among other factors.
SLT sale suffers ‘signal drop’ with Mobitel going to courts against Dialog-Airtel merger claiming that 64% combined market share of amalgamated Dialog-Airtel entity is monopolistic and seriously jeopardise its viability
It stresses TRCSL is duty bound to prevent monopolies and uphold interests of consumers.
SLT Mobitel has challenged in Court of Appeal possible combination of spectrum allocated 52% of total to Dialog and Airtel alleging yje move is unlawful, utterly injurious and constitute a violation of conditions in spectrum licences.
It also claims that law demands if merging and Airtel ceases to operate, should surrender spectrum allocation to TRCSL and such surrendered spectrum be reallocated amongst all existing operators according to law
SLT Mobitel opined profit motive of the monopolist would be to initially reduce price to drive out competitors and thereafter increase price after capturing the market
It Insists telecommunication is an essential public service and is of fundamental importance that multiple competing operators exist so that acceptable service levels and pricing will be available to public
Following SLT Mobitel’s petition and respondents filing their answers, the matter is now subject to discussion among relevant parties to reach an agreement for equal distribution of spectrum enjoyed by Airtel. If no agreement, the matter will be taken up in the Court of Appeal next month.
In May, Dialog Axiata PLC announced that it has entered into a binding term sheet to combine operations of Airtel and the discussions were ongoing.
The proposed transaction is subject to signing of definitive agreements and necessary closing conditions including applicable regulatory and shareholder approvals.
In the Court of Appeal case, Mobitel Ltd., and its Chief Operating Officer Sudarshana Geeganage are the petitioners and the respondents are 1) TRCSL, 2) Dialog Axiata, 3) Dialog Broadband Networks Ltd., 4) Bharti Airtel Lanka Ltd., and 5) Sri Lanka Telecom PLC.