Bharti Airtel, Axiatia Group subsidiaries merger credit positive: Moody's
The merger, which the companies expect to conclude in the first half of the year, will be structured via the issuance of ordinary shares, whereby Robi Axiatia will issue new ordinary shares to Bharti Singapore, Moody's said.
The merger of subsidiaries of Bharti Airtel and Axiata Group in Bangladesh is credit positive for both the companies, Moody's Investors Service said on Thursday.
On January 28, Bharti Airtel (Baa3 stable) and Malaysia-based Axiata Group Berhad (Baa2 stable) announced that they had agreed to merge their telecom subsidiaries in Bangladesh.
Airtel Bangladesh is wholly-owned by Bharti Airtel and Robi Axiata, it is 91.59% owned by Axiata and 8.41% owned by Japan's NTT Docomo.
"The merger, which requires regulatory approval, is credit positive for both Bharti Airtel and Axiata," Moody's said in a statement.
The merger, which the companies expect to conclude in the first half of the year, will be structured via the issuance of ordinary shares, whereby Robi will issue new ordinary shares to Bharti Singapore, a wholly-owned subsidiary of Bharti Airtel.
After completion of the merger, the companies expect that Axiata will own 58.7% of Robi-Airtel, Bharti Airtel will have 25% and NTT 6.3%, it added.
Moody's said the new entity, Robi-Airtel, will have a stronger market position than either Robi or Airtel has on a standalone basis in Bangladesh's highly competitive mobile telecommunications market. Also, it said, the merger will ultimately enhance network quality and coverage and allow operational synergies without adversely affecting the credit quality of either Bharti Airtel or Axiata.
"We do not expect Bharti Airtel's and Axiata's metrics to be significantly affected by the merger because the contribution from their respective Bangladeshi subsidiaries is relatively small," it said.