The Telecommunications Regulatory Commission of Sri Lanka (TRCSL) has instructed Hutchison Telecommunications Lanka (Private) Limited (Hutch Lanka) to hand over 5MHz of its 900MHz band spectrum to TRCSL, subsequent to its recent merger with the Etisalat Lanka (Private) Limited (ESL), TRCSL sources told Ceylon FT.
The combined business of Hutch Lanka and ESL currently has 15 MHz (7.5 MHz each) of the 900 MHz band spectrum. Spectrum range is an important asset and resource for mobile network operators (MNOs), and additional spectrum ownership could provide significant business opportunities.
“As a regulator, we have to set up an equal, level playing field for all other 4G telecom operators in Sri Lanka, because they are all (except Airtel) currently operating 7.5 MHz of the 900MHz band spectrum capacity for their 4G operations,” TRCSL sources said.
Meanwhile, it was learned that Sri Lanka Telecom Mobitel was responsible for pressing the TRCSL to impose such conditions on the Hutch-Etisalat merger – out of fear of the competition that would result from it.
Last year, TRCSL allocated 15MHz of the 1800MHz band spectrum – which was earlier owned by Electroteks Global Networks Pvt Ltd – to Mobitel for Rs 4 billion, according to Electotek’s owner, B.A.C. Abeywardena.
He has currently filed a case against TRCSL in the Court of Appeals regarding this transfer, alleging that it was an illegal move as he owns the spectrum rights until 2026.
UAE-based Emirates Telecommunications Group Company PJSC (Etisalat Group) completed the sale of its 100% shareholding in Etisalat Lanka (Private) Limited (ESL) to Hutchison Telecommunications Lanka (Private) Limited (Hutch Lanka) on 30 November 2018, with regulatory approval of the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) and Board of Investment (BoI), top-ranking company sources confirmed to Ceylon FT.
Upon completion of the sale, CK Hutchison Holdings Limited Group will have the majority and controlling stake of 85%, while Etisalat Group will have 15% ownership of Hutch Lanka. Therefore, Hutchison Telecommunications Lanka (Pvt) Ltd will be the surviving entity of this merger, with 20% market share in the Sri Lankan mobile telecommunications industry.
The combined value of these two Sri Lankan entities is around US$ 200-250 million, while Hutchison Telecommunications Lanka (Pvt) Ltd plans to invest a further US$ 250 million to uplift its infrastructure facilities, including a 4G network in Sri Lanka.
“The two companies will continue to operate separately on an immediate basis and will gradually merge into a single business under the Hutchison brand over the next six to eight months,” Hutchison Lanka and Etisalat Lanka officials told Ceylon FT.
The Hutch Department heads and Etisalat heads will collaborate to improve the telecom business in the immediate term and set the path toward a bigger, unified business. There are currently 540 employees in Etisalat Lanka and 358 in Hutch.
“2019 will be a very important year that will require a lot of hard work to make this merger a success. We will require everyone’s support to achieve our goals; and there will be no redundancies for the next two years,” they said.
The combined business of Hutch Lanka and ESL will be better positioned to serve their Sri Lankan customers. This transaction is part of the stated strategy of the portfolio optimization of the Etisalat Group.
Sri Lanka currently boasts 100% mobile penetration, with two dominant operators (Dialog and Mobitel) commanding 70% market share with extensive 2G, 3G and 4G infrastructure. There is a challenge for smaller operators to build competitive 4G and future 5G infrastructure and deliver a return on investment. Hutch is the third 4G operator in the country.