The UAE’s largest telecoms operator, Etisalat, has begun initial talks with several international telecom operators, including India’s Bharti Airtel, over the potential sale of its Sri Lankan unit.

A source close to Etisalat told Arabian Business that Airtel was one of several operators to approach the company.

Etisalat began its operations in Sri Lanka in 2010, after acquiring a 100 percent stake in Tigo, a subsidiary of Millicom International Cellular, for $155m.

Sri Lanka is a highly competitive market, with five mobile operators serving a population of 21 million people.

According to the GSM Association, Etisalat Sri Lanka’s share of the mobile market was 21 per cent in 2012, making it the third-largest operator in the country.

“Consolidation needs to happen in Sri Lanka since the market cannot sustain all five operators, the source told Arabian Business. “Etisalat has already had interest from other operators in Sri Lanka to merge their business [with theirs] or to acquire Etisalat's business in Sri Lanka.

“For example, Airtel is very interested. They are the number-one operator in India, and India has a close relationship with Sri Lanka. So it makes sense for them.

The source did not give a timeline for the potential completion of the deal, or a value for the stake.

Airtel already has a presence in Sri Lanka, although its subsidiary is the smallest operator in the country, with a 7 per cent market share in 2012.

When contacted, a Etisalat spokesperson refused to comment, quoting company policy not to make statements on market rumours or speculation.

Etisalat, now the twelfth biggest telecoms firm in the world, has operations in 19 countries across the Middle East, Africa and Asia with a subscriber base of over 182 million.

The company has been reassessing its portfolio over the last two years, and completed the $509m sale of its 9.1 percent stake in Indonesia’s XL Axiata in 2012. Etisalat continues to hold a small minority stake in the Indonesian opearator.

In May this year, Etisalat completed the purchase of French telco Vivendi’s 53 percent stake in Morocco’s Maroc Telecom for $5.3bn. (With inputs from Arabian Business)