Kolkata, India (BBN)-The merger of Bharti Airtel and Axiata Group’s telecom units in Bangladesh will be “credit positive” for both parent companies, said Moody’s Investors Service Thursday.

The merger, which requires regulatory approval, is “credit positive” for both Bharti and Axiata, and the new entity, “Robi-Airtel, will have a stronger market position than either Robi or Airtel has on a standalone basis in Bangladesh’s highly competitive mobile telecoms market,” said Moody’s, reports The Economic Times.

According to Moody’s Investor Service, “the merger will ultimately enhance network quality and coverage and allow operational synergies without adversely affecting the credit quality of either Bharti Airtel or Axiata”.

Airtel Bangladesh is wholly-owned by Bharti Airtel while Robi Axiata is 91.59 per cent-owned by Malaysia-based Axiata and 8.41 per cent-owned by Japan’s NTT DoCoMo.

Bharti and Axiata had announced plans to merge their respective overseas subsidiaries in Bangladesh last week.

The merger, which Bharti Airtel and Axiata expect to conclude in the first half of the year, will be structured via issuance of ordinary shares, whereby Robi will issue new ordinary shares to Bharti Singapore, a wholly owned subsidiary of Bharti Airtel.

On completion of the agreed merger, the companies expect Axiata to own 58.7 per cent of Robi-Airtel, while Bharti Airtel and NTT DoCoMo will own 25 per cent and 6.3 per cent respectively.

Analysts at Moody’s Investor Service expect the Robi-Airtel merged entity to be the largest spectrum holder in both 900 Mhz and 1800 Mhz bands with 12 units and 17 units of such airwaves respectively.

The telecom market in Bangladesh is fiercely competitive with six operators.

The merger of Airtel Bangladesh and Robi Axiata will boost market share, which will also be credit positive for the merged entity, said Moody’s Investor Service.