Etisalat pips Bharti, BSNL to buy Millicom’s Lankan biz

UAE Co Clinches Deal For $155 M In Total Cash Proceeds UAE'S Etisalat has pipped Bharti Airtel and BSNL, Russia's Vimpelcom and Axiata — the international arm of Telekom Malaysia — to buy Luxembourgbased Millicom's Sri Lankan mobile network.      Millicom International Cellular in a statement on Friday said it has agreed to an 'unconditional agreement for the sale of its Sri Lanka operation to Etisalat for about $155 million in total cash proceeds'. Millicom also said "the deal valued its Sri Lanka operation at an enterprise value of $207 million, which represents about 7.4x estimates 2009 EBITDA", while adding that "the transaction was expected to close by October 20".      While Bharti's bid amount is not known, an industry executive said BSNL's bid had valued the Lankan firm at a little over $100 million. Last month, as first reported by ET, Millicom had rejected BSNL's bid, as it was substantially lower that the price it expected for its Lankan assets.      Millicom's Sri Lankan telecom arm Celltel, which offers services under the Tigo brand, is the third-largest operator in the island country with about three million subscribers and has a 17.3% market share. Tigo also holds a 10-year licence, which extends until 2018, and its network coverage extends to 81% of the island nation. For Bharti, this is its second setback within the last fortnight after its failure to clinch ad deal with South Africa's MTN. On September 30,Bharti and MTN had called off the proposed $23-billion merger over the South African government's inability to accept the deal in its format that was agreed upon by both the companies.      Besides, for Bharti, a successful bid for Tigo would have helped it treble its user base in Sri Lanka. Bharti's Sri Lankan arm, which launched mobile services past year, has already invested $125 million there against a commitment of $250 million, and crossed a subscriber of 1 million within six months of launch. In Lanka, Bharti has already overtaken Hutchison Lanka, and is now the fourth-largest operator there in terms of customers. Bharti's tactics of low pricing, at both peak and off-peak hours, in addition to helping the company garner market share, has also triggered a price war in the Lankan market. Sri Lanka, with a population of about 20 million, had 11.5 million mobile phone users as of April-end, as per data released by its government. Millicom International had put its Asia operations, which included networks across Cambodia, Laos and Sri Lanka on the block in July 2009. Millicom has already entered into agreements with Russia's Vimpelcom and Malaysia's Axiata for sale of its assets in Laos and Cambodia, respectively. "This agreement represents the final element of our recent divestment programme, and upon completion of the previously announced transactions concerning our Cambodian and Laotian operations, will leave the group well positioned to focus on the significant long-term growth opportunities in Latin America and Africa," Millicom said.