Business Times

Suntel saga: Now SLT in the running with $200 mln deal

By Bandula Sirimanna

Sri Lanka Telecom (SLT) is set to spend an estimated US$200 million on acquiring Sri Lanka's second-largest land-based telephone company Suntel which has been looking for a buyer for the past 12 to 18 months, the Business Times reliably learns.

Saddled with debt and legal issues, Suntel has attracted offers from India’s Tata Group, a Malaysian party, Etisalat and Dialog among others. The last named company was in serious negotiations which led Suntel to resort to major staff cuts across the board, sources at Suntel said, adding that influential businessman Dhammika Perera is involved “in some way in the negotiations between SLT and Suntel.”

A top SLT official said the SLT board has taken a decision to purchase Suntel as it will be a financially viable deal. The official, who declined to be named, revealed that Suntel management had approached the SLT and offered the deal and this was the second time they came forward to sell their stake to SLT. A proper procedure will be followed and a due diligence will be conducted before finalizing the deal, he said. He pointed out any decision on this matter will be taken for the benefit of SLT.

Sharemarket analysts said however the news should be treated with some reservation as previous offers to buy Suntel were as exciting but didn’t succeed. “We have to wait and see what the due diligence will come up with,” one analyst said.

SLT trade unions claimed that CEO Greg Young is pushing the deal. The CEO along with some Indian telecom officials held discussions with Suntel management to make preliminary arrangements of the deal, they said. Trade union officials said that they are opposed to this acquisition as Suntel has huge liabilities and dues to some of its major corporate customers. A senior member of a SLT trade union said that SLT has committed a sum of Rs.2 billion for the I- Sri Lanka project and with this proposed new investment of $200 million, the company will definitely face a financial crisis. The SLT CEO is taking decisions, risking the job security of 8,000 employees of the company, he said.

However the SLT top official rejected the accusation saying that the Board will not take a decision detrimental to the company and that employees should not unnecessarily panic. Last year, Indian state-run telco Mahanagar Telephone Nigam Ltd (MTNL) was among the first to submit a formal bid to acquire Suntel, offering a price in the range of $100 million to $120 million. MTNL then withdrawn its bid as it encountered legal issues and high liabilities.

Suntel Ltd. provides telecommunications services in Sri Lanka. The company provides voice, hosted PABX, broadband Internet, virtual mail server, Web creation and hosting, and managed security services for businesses. It also offers postpaid and prepaid services for residential customers. In addition, the company provides Internet data centre services.

Further, it engages in consulting, designing, implementing, and maintaining network infrastructure, application services, and storage systems. The company was founded in 1996 and is based in Colombo, Sri Lanka. Suntel Ltd. operates as a subsidiary of Overseas Telecom AB.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
Other Business Times Articles
Suntel saga: Now SLT in the running with $200 mln deal
Customs to open Green Channel for 75 companies
Sapugaskanda oil refinery project meets Iranian hurdle
Sanken, JKH JV on 240-room business hotel in Colombo
Largest-ever company sponsored overseas trip
COMMENT - Persisting conflicts of interest
Das Kapital in a tea cup
Colombo Dockyard beats international competition to win another top contract
Most Sri Lankans believe economy has improved-study reveals
SLASSCOM elects new Chairman and board for 2011
Sri Lanka is a goldmine for tourism, says expert
Another environmental accolade for SriLankan Catering
Eagle unit offers to retail investors on IPO investmentds
Market research needed to minimise risk and uncertainty in markets
COYLE launches series on successful Lankan entrepreneurs
Industrial Gases Pvt Ltd begins dry ice production
Derivatives: Need to create market maker (participant)
Commercial Bank to support national development with IFA loan
LINA Manufacturing (Pvt) pioneers export of dry powder respiratory care products
Janashakthi records post-tax profit growth of 93%
SriLankan Catering wins sixth environmental award
Nestlé Lanka receives highest number of awards at Achievers 2011
Sri Lanka car market registrations slump in July
Motor Traders Association comes up with a novel concept on road safety
Shaw Wallace Ceylon, McLarens Holdings form joint venture in automotive sector
Sathosa Motors focuses on product development and new technologies
A Singapore company offers dedicated service for Hybrid cars in Sri Lanka
SEC fine on ERI; Easy way out?
Large shareholders say no shine at Blue Diamond
Controlling shareholders enrich themselves at cost of independent minority shareholders- investor
ICASL launches 'Induction to Hall of Fame' to recognize outstanding senior chartered accountants
Big business at the Colombo bourse
Promoting SriLankan Airlines’ surfing competition
CB Governor says Sri Lanka's GDP would reach $100 billion in five years


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 1996 - 2011 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved | Site best viewed in IE ver 8.0 @ 1024 x 768 resolution