Dialog Axiata unit seals deal to operate data centre business in Sri Lanka

KUALA LUMPUR: Telecommunications services provider Axiata Group Bhd is venturing into data centre business in Sri Lanka through the subscription of a 35 per cent stake in Digital Reality Pte Ltd for 262.5 million rupees (RM6.6 million).

The exercise will be undertaken by Dialog Broadband Networks Pte Ltd (DBN), a unit of Axiata’s 83.32 per cent subsidiary, Dialog Axiata Plc.

Axiata said in a filing to Bursa Malaysia DBN had entered into a shareholder agreement with St Anthony’s Property Developers Pte Ltd (SAPD) for the share acquisition, which will allow it to establish, operate and manage a data centre business in Sri Lanka.

Under the agreement, SAPD provides options for DBN to increase its stake in Digital Reality and obtain control, which are exercisable from year three to year five.

Digital Reality was established to operate and manage Sri Lanka’s first-ever high-density data centre, which will be located at Orion City IT park in Colombo.

SAPD is the sole shareholder of Digital Reality.

Axiata said the share acquisition would be funded through internally-generated funds.

Meanwhile, Dialog Axiata is still in the progress of getting its broadband network licence renewed in Sri Lanka, which has been delayed since May 2015.

In December last year, Prime Minister Datuk Seri Najib Razak said he was optimistic the longstanding issue would be solved, adding that he and Sri Lankan President Maithripala Sirisena had agreed to form a committee to resolve the issue.