The government-owned Bharat Sanchar Nigam Ltd (BSNL) is planning to buy Luxembourg-based Millicom’s Sri Lanka operations.
The management committee of BSNL on Wednesday approved a proposal to submit a bid to acquire the company.
Millicom International is selling its operations in Sri Lanka, Cambodia and Laos. In Sri Lanka, its Tigo network is the third-largest mobile network with a subscriber base of over 2 million (20 lakh).
“We are looking at various opportunities to expand our operations in foreign markets,” said Kuldeep Goyal, chairman and managing director of BSNL. “This is one of them.” BSNL has undersea cable connectivity in Sri Lanka.
“BSNL has global aspirations and it has got cash reserves,” said B.K. Syngal, senior principal, Dua Consulting. “The PSUs have perception problem. They can not take quick decisions even if a deal is good. This deal could be a small step in demonstrating that BSNL can make acquisitions.”
At Rs 34,000 crore, BSNL is India’s second-largest telecom service provider, after Bharti Airtel’s Rs 37,000 crore.
Industry sources said BSNL would have to compete with a number of operators including Malaysia’s Axiata Group, Russia’s Vimpelcom and Etisalat from United Arab Emirates.
Sources said that Bharti, which already has operations in Sri Lanka, may also show interest in Millicom. Bharti’s subsidiary has over 1 million (10 lakh) subscribers in Sri Lanka.
BSNL’s foreign foray is in tune with Indian telecom companies looking overseas for expansion. Bharti Airtel is negotiating with South Africa-based MTN for a deal that will lead to the merger of the two companies. Essar group has bought telecom licences in Kenya and has ambitions to expand its operations in Africa.
Reliance Communications has plans to acquire telecom companies in overseas markets. It had earlier entered into negotiations with MTN but even after they failed it retains its Africa plans. The government-owned Mahanagar Telephone Nigam Ltd (MTNL) is also looking at acquisitions abroad, said an MTNL official.