After having failed to acquire Africa’s MTN, Sunil Mittal has now set his eyes on Zain to enter Africa. But his best bets could be much closer home than he thinks.
Africa? A book one thumbs: listlessly, till slumber comes...”: Countee Cullen
Businesses today couldn’t help but disagree with Countee Cullen’s poetic rendition of the Dark Continent. Companies across the globe have been increasingly laying out plans to acquire invaluable assets in the continent where the fruits of global economic growth have been the slowest in the coming. Understandably, it’s a key to Bharti’s ambitions towards becoming a powerful emerging market telecom giant; ambitions that seem to be growing by the day, undeterred by rounds and rounds of MTN disillusionment.
Bharti Airtel kickstarted 2010 with the announcement to acquire a 70% stake in Bangladesh’s Warid Telecom International (a wholly owned subsidiary of UAE’s Dhabi Group) for about $300 million. This was a landmark deal for Bharti Airtel, as it was the company’s first acquisition in the international market. Though the company also has operations in Sri Lanka, it was not through inorganic route. But given that it is only the fourth largest operator in the entire country and has a current subscriber base of 2.9 million subscribers, the company has made it clear that they might be looking at further acquisition in the Bangladeshi markets. Further, on the heels of this acquisition came out hushed rumours that the company was looking at strategic stakes as well as other options to enter Bhutan.
Add to it the fact that starting from February 15, 2010, Bharti Airtel has entered into exclusive talks with Kuwaiti telecom major Zain to acquire its assets in Africa (except for its operations in Morocco and Sudan). This exclusive talk period would last till March 25, and the deal is expected to be worked out till May. It is noteworthy that this is Bharti’s third attempt to enter the African market as it has tried to woo another MTN to enter into an alliance twice in the past and failed in both the attempts.
However, things are expected to be a little different this time as it would not be as complex a deal as the one that was being worked out with MTN. There is no doubt that Africa is considered to be a lucrative market from a wireless operator’s point of view but according to some analysts, Bharti might be coughing out a whopping $10.7 billion (making it the second largest cross border deal after Tata Corus, which was $13 billion deal) and the deal would swell Bharti’s subscriber base to about 170 million from the current tally of 125 million. Further, the company would become one of the top ten service providers globally. Another positive side of this particular deal is that out of the 15 markets that Zain operates in, it is a market leader in 10 countries and the second largest in the other four. “This particular acquisition for Bharti comes at the cost of $200 per subscriber as opposed to $450 that Vodafone paid when it launched its operations in the country or the average of $500-$600 that has been paid for other operations that have happened in the past couple of years. It seems to be a strategic acquisition for the company in the long terms,” shares the India head of one of the leading AMCs in the country.
Africa? A book one thumbs: listlessly, till slumber comes...”: Countee Cullen
Businesses today couldn’t help but disagree with Countee Cullen’s poetic rendition of the Dark Continent. Companies across the globe have been increasingly laying out plans to acquire invaluable assets in the continent where the fruits of global economic growth have been the slowest in the coming. Understandably, it’s a key to Bharti’s ambitions towards becoming a powerful emerging market telecom giant; ambitions that seem to be growing by the day, undeterred by rounds and rounds of MTN disillusionment.
Bharti Airtel kickstarted 2010 with the announcement to acquire a 70% stake in Bangladesh’s Warid Telecom International (a wholly owned subsidiary of UAE’s Dhabi Group) for about $300 million. This was a landmark deal for Bharti Airtel, as it was the company’s first acquisition in the international market. Though the company also has operations in Sri Lanka, it was not through inorganic route. But given that it is only the fourth largest operator in the entire country and has a current subscriber base of 2.9 million subscribers, the company has made it clear that they might be looking at further acquisition in the Bangladeshi markets. Further, on the heels of this acquisition came out hushed rumours that the company was looking at strategic stakes as well as other options to enter Bhutan.
Add to it the fact that starting from February 15, 2010, Bharti Airtel has entered into exclusive talks with Kuwaiti telecom major Zain to acquire its assets in Africa (except for its operations in Morocco and Sudan). This exclusive talk period would last till March 25, and the deal is expected to be worked out till May. It is noteworthy that this is Bharti’s third attempt to enter the African market as it has tried to woo another MTN to enter into an alliance twice in the past and failed in both the attempts.
However, things are expected to be a little different this time as it would not be as complex a deal as the one that was being worked out with MTN. There is no doubt that Africa is considered to be a lucrative market from a wireless operator’s point of view but according to some analysts, Bharti might be coughing out a whopping $10.7 billion (making it the second largest cross border deal after Tata Corus, which was $13 billion deal) and the deal would swell Bharti’s subscriber base to about 170 million from the current tally of 125 million. Further, the company would become one of the top ten service providers globally. Another positive side of this particular deal is that out of the 15 markets that Zain operates in, it is a market leader in 10 countries and the second largest in the other four. “This particular acquisition for Bharti comes at the cost of $200 per subscriber as opposed to $450 that Vodafone paid when it launched its operations in the country or the average of $500-$600 that has been paid for other operations that have happened in the past couple of years. It seems to be a strategic acquisition for the company in the long terms,” shares the India head of one of the leading AMCs in the country.
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