Hutch and Etisalat merger almost complete | Sunday Observer

Hutch and Etisalat merger almost complete

The Hutchison and Etisalat Group have completed the combination of their operations and look forward to better serving the industry, especially their customers.

“We are committed in investing over US $ 200 million in the next couple of years in upgrading the common infrastructure facilities. We have observed the market requirements and will work accordingly becoming the Third Force in the country’s telecommunication industry,” Chief Executive Officer, Hutchison Telecommunications Lanka (Pvt) Ltd., Thirukumar Nadarasa said.

There will not be a price war, due to expected huge demand for data, he said at a press conference held in Colombo last week.

The merger between Hutchison and Etisalat Group will be completed within the next few months and the local telecommunication industry will have four players to serve the 20 million population.

“The two major players have a market share of 70% and with the completion of the merger we expect to have a 20% plus market share. We do not concentrate on growing the customer base aggressively but, will be more seriously looking at a return on our investment. We will combine our 2G/3G network to compete effectively with the dominant players in the market,” he said.

The consolidation and merger is expected to provide sustainability and stability to the telecommunication industry which has been a success story in the country. This resulted from the pure competition among the players and market forces. There is 100 percent mobile penetration in the market and prior to the merger there were five operators. Therefore, some kind of consolidation was needed.

“We will combine our resources and towers and there will be no curtailment of employment on either front. We will absorb 500 Etisalat employees, and staff strength will be 850 once the merger is completed. They will have better job satisfaction and job security. The government was keen on the job security of the employees and we have assured this aspect in the combining process,” he said.

The process will make everybody a winner and we will introduce innovative products and services in growing the business. We will use the talent and experience of the two teams to build the future while becoming a much larger and stronger organisation.

The merger will provide us with a better market share, to achieve higher growth and economies of scale. The combine operation will enable Hutch to secure 85% of the company while Etisalat will hold 15% stake with one Board member. The legal amalgamation will take place within the next six to eight months, he said.

“Mobile technology is evolving towards 3G to 4G. However, internet penetration in the country remain as low as 30%. This is the result of the high price of the handsets, and it has been the drawback. The handset price has to come down to an affordable level to increase internet penetration. We expect this to happen within the next two to three years,” Natarasa said. The removal of Floor Rate and the number of players coming down to four, will augur well for the local Telecommunication Industry. 

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