Hutch has revealed plans to invest US$200 million in the medium term post-merger with Etisalat to bolster 4G services and win more businesses in the highly competitive mobile telecom market.
The merger was finalised last week, after it was first announced in April with Hutch being the surviving entity and brand. Hutch’s parent, the Hong Kong-based giant CK Hutchison Holdings Group, will own 85% stake in the merged Lankan venture, and UAE’s flagship brand Etisalat Group will own 15%. Post-merger Hutch, which is the bigger player vis-à-vis Etisalat, will catapult to number three with a 20% market share in the mobile telecom industry, which is 70% dominated by Dialog and Mobitel. The other player is Airtel.
Hutchison Telecommunications Lanka CEO Thirukumar Nadarasa told the media yesterday that the merger process is expected to take up to 18 months, during which time systems, networks, products and services will be combined to provide customers a much larger 2G, 3G and 4G network, and better overall value.
There will be no forced retrenchment or voluntary retirement, as the merged entity plans to operate with the combined staff of 850. Hutch Lanka will continue to retain and support both numbers of 078 and 072, and tariff plans with no change in existing customer mobile numbers.
“In a market which has exceeded 100% penetration and saddled with too many players and given the current operating and future challenges, the merger makes sense,” emphasised Nadarasa. “The merger brings in stability, an end to senseless competition and more room for healthy growth,” he added.
Before finalising the deal with Etisalat, a first for both Groups which have operations globally, Hutch was in talks to be acquired by Mobitel, but that move fell off last year.
“With higher market share, economies of scale, technology and network, we can grow faster,” he added.
Hutch recently launched 4G services in the Western Province and will invest $ 200 million over the next five years as part of a nationwide rollout, as well as enhance its 2G and 3G services. “Our 4G network quality and reach will be better or comparable to the market leaders,” Nadarasa said, adding that the future of mobile telecom lies in broadband data use. “We will continue to provide innovative and best value for money products and services to all our customers,” he added.
The combined entity has 2,500 telecom towers countrywide, and will rationalise in areas where there is duplication.
Hong Kong-listed CK Hutchison Holdings is a renowned multinational conglomerate with extensive interests in six core sectors - ports and related services, retail, infrastructure, energy, finance and investment and telecommunications. With operations in over 50 countries and 300,000 employees last year its revenue was $ 53 billion. CK Hutchison Holdings telecom operations include 3 Group Europe, as Wind Tre in Italy, in Australia in partnership with Vodafone, in Indonesia and Vietnam and three branded networks in Hong Kong and Macau.
Etisalat has 143 million subscribers in 16 countries in the Middle East, Asia and Africa.