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Wed 16 Sep 2009 08:50 PM

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India's BSNL to bid for Millicom Sri Lanka unit

UPDATE 2: UAE's Etisalat said on Monday it had tabled offer for Sri Lankan assets.

Indian Bharat Sanchar Nigam Ltd joined

in the race to buy Millicom's Sri Lankan operations, with the chairman of the state-run telecom saying on Wednesday a bid had been made.

The UAE's
Emirates Telecommunications Corp (Etisalat)

said on Monday it had bid for the Sri Lankan assets.

Media reports said Indian market leader Bharti Airtel, which recently started mobile operations in Sri Lanka, was also looking at the Millicom unit, Celltel, to help it expand rapidly there.

BSNL chairman Kuldeep Goyal did not provide further details of the bid for the Millicom unit when asked about it at a media conference called for another matter.

He also declined to say whether BSNL had decided to join a consortium to buy a stake in Kuwaiti telecom


"It is a welcome move that they are showing interest in markets outside India," said Mahesh Uppal, director at New Delhi-based telecoms consulting firm Com First.

"The experience in these markets will have a good bearing on their competitiveness and make them more nimble-footed, which they currently aren't," he said.

BSNL is India's fourth-largest mobile operator and the second-largest telecoms firm including fixed-line subscribers, but increasing competition from private operators has hurt the former monopoly, which has lost significant market share.

The unlisted company has cash reserves of over $6 billion and would need the government's nod to make any big investment.

A source with direct knowledge of the matter told Reuters that management consulting firm Value Partners was advising BSNL.

Celltel, which operates under the Tigo brand, is Sri Lanka's third-largest mobile operator with about three million subscribers. It has a market share of about 15 percent.

Millicom put its assets in Sri Lanka, Laos and Cambodia up for sale earlier this year, and said it expected to complete the deals by the first quarter of 2010.

On Wednesday, Millicom said it agreed to sell its 74.1 percent holding in Millicom Lao Co Ltd to Vimpelcom for about $65 million.

Last month, it signed an agreement to sell its Cambodian operations to its local partner the Royal Group for $346 million.

Sources had earlier told Reuters Millicom's Cambodia and Sri Lanka operations were worth at least $500 million.

BSNL has said it was open to expanding overseas, and last week said it was considering an invitation to join a consortium that is buying a 46 percent stake in Kuwaiti telecoms firm Zain.

On Tuesday, Goyal told Reuters that was still under consideration. (Reuters)

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