Investors

INTRODUCTION

Following the notification by Dialog Axiata PLC (“Dialog”) to the Colombo Stock Exchange ("CSE") on 13 May 2013, we are pleased to announce that Dialog Broadband Networks (Private) Limited (“DBN”), a wholly owned subsidiary of Dialog which in turn is a 84.97% subsidiary of Axiata had, on 13 May 2013, completed the acquisition of Sky Television and Radio Network (Private) Limited (“Sky”) (“Acquisition of Sky”).
INFORMATION ON THE COMPANIES

Dialog

Dialog was incorporated in August 1993 and commenced operations in 1995. The stated capital of Dialog is LKR28,103,913,435. Dialog, listed on the CSE, is the largest mobile telecommunications service provider in Sri Lanka supporting over 7.8 million subscribers and operating 2.5G, 3/3.5G and 4G mobile communications networks supporting the very latest in multimedia and mobile internet services. In April 2013, Dialog secured the distinction of becoming the first service provider in South Asia to launch mobile 4G FD-LTE services. Dialog was also the first service provider in South Asia to launch 3G services in 2006. Dialog also provides a comprehensive suite of International Roaming Services across a global footprint comprising of more than 200 countries, and operates a wide portfolio of international telecommunication services, including but not limited to retail and wholesale international voice and data services. Dialog supplements its market leading position in the Mobile Telecommunications sector with a robust footprint and market presence in Sri Lanka’s Fixed Telecommunications and Digital Television markets through its fully owned subsidiaries DBN and Dialog Television (Private) Ltd. Furthermore in the pursuit of achieving Leadership in Digital Services, Dialog Group has ventured into digital commerce space by acquiring a strategic stake in the biggest daily deal site in Sri Lanka which will provide a platform for all of Dialog’s Digital Services driven predominantly by digital commerce, digital money and digital advertising, which is currently at a nascent stage.

DBN

DBN was incorporated in 1993, and is Sri Lanka’s second largest Fixed Telecommunications provider. DBN serves residential and enterprise customers with voice, broadband, lease lines and customized telecommunication services. DBN has the distinction of being the first telecommunications operator in Sri Lanka to launch 4th Generation LTE High Speed Broadband Services. DBN is also a leading provider of Radio and Optical Fibre based transmission infrastructure facilities.

Sky

Sky was incorporated on 13 June 2006 and is a licensed Pay Television Operator, currently in possession of spectrum allocations in the 2.3GHz spectrum band, assigned to the company by the Telecommunications Regulatory Commission of Sri Lanka ("TRCSL"). The stated capital of Sky is currently LKR46,052,375 comprising 11,640 fully paid ordinary shares.

SALIENT TERMS OF THE SHARE PURCHASE AGREEMENT (“SPA”)

Under the SPA entered into by DBN with the shareholders of Sky, namely Mr. Nihal Hettiarachchi, Mrs. Sahida Hettiarachchi, Serendib Green (Private) Limited and Infotainment (Private) Limited, the acquisition by DBN of the entire equity stake in Sky is to be paid at a consideration of LKR800 million (equivalent to USD6.35 million). Upon completion of the SPA, steps will be taken to amalgamate Sky with DBN.

RATIONALE FOR THE ACQUISITION OF SKY

The Acquisition of Sky is centered on the spectrum assets currently under its possession in the 2.3 GHz spectrum band (“Spectrum Assets”) assigned by TRCSL for the provision of pay television services. The 2.3GHz spectrum band has been adopted globally for the provision of LTE Services and more importantly, DBN’s 15MHz based fixed LTE service launched in December 2012 which is within the said band. The acquisition of the Spectrum Assets in the same band, would enable DBN to expand its fixed LTE service resulting in expansion of its high speed broadband delivery capacity via LTE technology.

SOURCES OF FUNDS

The Acquisition of Sky will be undertaken wholly in cash which will be funded through internally generated funds.

FINANCIAL EFFECTS

The Acquisition of Sky does not have any effect on the issued and paid-up share capital of Axiata and is not expected to have any material effect on the earnings, gearings and Net Assets of the Axiata Group for the financial year ending 31 December 2013.

APPROVALS OF SHAREHOLDERS AND AUTHORITIES

The Acquisition of Sky is not subject to the approval of the shareholders of Axiata.

DBN has received the approval of the TRCSL on the Acquisition of Sky and its amalgamation with DBN along with the Spectrum Assets. TRCSL has also granted approval for the re-deployment of the Spectrum Assets for the purpose of expanding the broadband services delivered via LTE technology.

DIRECTORS’ AND MAJOR/SUBSTANTIAL SHAREHOLDERS’ INTEREST

None of the directors and major shareholders of Axiata and/or persons connected to them have any interest direct and/or indirect in the Acquisition of Sky.

This announcement is dated 14 May 2013.