Sri Lanka Telecom, chairman and 3 directors resign amidst a legal tangle with Dialog

By: Staff Writer

January 31, Colombo (LNW): In an unexpected move, partially four State owned Sri Lanka Telecom-Mobitel board directors have resigned allowing the finance ministry for reconstitution after the company management’s refusal to withdraw the case against proposed merger between industry leader Dialog Axiata and Airtel.

Sri Lanka Telecom Chairman Reyaz Mihular and three have resigned, the company said in stock exchange filings without giving reasons.

Lalith Seneviratne, Ranjith Rubasinghe have resigned with effect from January 29 and K A Vimalenthirarajah from January 30, the filing said.

Sri Lanka’s Daily FT newspaper reported earlier in the week that Mihular and other directors were asked to resign by the government which is the controlling shareholder.

The report said Mihular has been demanded to withdraw a case filed by Mobitel, against a merger of Airtel and Dialog, during a meeting with President Ranil Wickremesinghe.

Mihular had said it was a board decision which was based on the interests of the company and the request will be conveyed

SLT confirmed to the Colombo Stock Exchange that the firm had been copied a letter from the Secretary to the President to the Treasury Secretary on reconstituting its board.

The government is divesting its stake in Mobitel and India’s Jio Platforms, a unit of Reliance group and Gortune International Investment Holdings, a Chinese firm has expressed interest buying the firm

Mid-last year, Mobitel initiated legal action against Telecommunication Regulatory Commission (TRC) and Dialog, Airtel among others stating that proposed merger and action to combine spectrum allocations and/or permit the combination of spectrum of Dialog and Airtel without surrendering the spectrum enabling TRC to reallocate it among the existing operators according to law.

Mobitel is of the view that failure by TRC would be illegal, wrongful, unlawful, arbitrary, unreasonable and capricious etc.

The litigation was viewed as controversial as state control telco was challenging the regulator thereby the Government. However, Mobitel is of the view that it has a strong case and action was in the larger interest of the industry, shareholders and customers.

With SLT-Mobitel not budging and thereby delaying the Dialog-Airtel merger, a visibly annoyed President Ranil Wickremesinghe on 24 January summoned the SLT’s Non-Executive Chairman Reyaz Mihular and CEO Janaka R. Abeysinghe and requested for the withdrawal of the legal action.

However, Mihular, the top professional from the private sector and appointed as Chairman in July last year, had said he can’t decide but it was a Board decision on the future interest of the company and based on good counsel and will convey the President’s request formally to the Board.

 Same meeting it was implied by the officials that if needed SLT Board can be reconstituted to which Mihular had said as major shareholder it was the prerogative of the Government.