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Bharti Airtel announces Warid buyout..

Bharti Airtel announced on Tuesday it had agreed to buy a 70 percent stake of Warid Telecom in a deal that could total $1 billion.

The deal--the largest investment in Bangladesh by an Indian company--was announced as prime minister Sheikh Hasina was addressing a luncheon organised by the Federation of Indian Chambers of Commerce and Industry (FICCI), the apex body of Indian business lobbies, at Hotel Maurya Sheraton in New Delhi.

"This landmark deal underlines our intent to further expand our operations to international markets where we can implant our unique business model and offer quality and affordable telecom services," said Sunil Bharti Mittal, chairman and managing director of the Bharti Airtel.

Mittal said that the deal was also a symbol of the growing economic cooperation between the South Asian countries. He thanked the governments of India and Bangladesh for their support and encouragement.

Warid Telecom, Bangladesh's fourth largest telecom company, is currently a wholly owned subsidiary of the Dhabi Group, offering mobile services across all the 64 districts of Bangladesh and has a total customer base of over 2.9 million.

Under the agreement, Bharti Airtel said it will make a fresh investment of US $300 million to rapidly expand the operations of Warid Telecom and will have management and board control of the company.

Bharti Airtel also termed Bangladesh "one of the few remaining large growth markets".

"Bangladesh, with a population of over 160 million and teledensity of 32% is a very promising market for telecom services. Bharti is keen to work in Bangladesh and contribute to achieving the vision of Digital Bangladesh even sooner than 2021," said the Bharti Airtel chief.

Bangladesh Telecom Regulatory Authority approved Bharti Airtel's investment in Warid Telecom earlier this month.

Dhabi Group will continue as a strategic partner retaining 30% shareholding and have their nominees on the board of the Warid Telecom.

Mittal said that the acquisition by Bharti Airtel would be partly funded by purchase of existing shares held in Warid Telecom International Limited by Dhabi Group for a nominal consideration and balance by way of issue of fresh shares at par.

"The new funding will be utilised for expansion of the network, both for coverage and capacity, and introduction of innovative products and services. As a result of this additional investment, the overall investment in the company will be in the region of USD 1 billion," he said.

In a statemnt issued by Bharti Airtel, HH Nahayan Mabarak Al Nahayan, the chairman of the Dhabi Group, said: "We are pleased to partner Bharti Airtel and believe this partnership will bring benefits to all stakeholders, most importantly the customers of Warid Telecom."

"The telecom market in Bangladesh has immense growth potential and Bharti Airtel's rich experience and product portfolio promise to redefine this market."

"We are confident that this partnership will help establish the company as a leading player in the Bangladesh telecom industry," said Nahayan Mabarak Al Nahayan.

The deal will pave the way for Bharti Airtel to launch its second operation outside India.

The company had launched its mobile services in Sri Lanka in January 2009 on a state-of-the-art 3.5 G network. The company crossed the 1 million customers mark in Sri Lanka within six months of launch on the back of innovative offerings as well as rapid expansion of network coverage and distribution.

The Warid deal, the first overseas acquisition by Bharti Airtel, may be seen as a shift to smaller targets after its previous acquisition plan failed, says Reuters.

Last year, Bharti failed to close a $24 billion deal with South Africa's MTN.

Indian telecom companies have been looking outside for acquisitions as the domestic mobile sector faces margin pressures from intense competition and price wars, which are leading to lower tariffs.

"Our acquisition strategy is to go to the emerging markets and Bangladesh is clearly a very, very large emerging market," Bharti Airtel Chief Executive Manoj Kohli told reporters after signing the agreement with Abu Dhabi Group.

Analysts said the Warid holding was unlikely to boost Bharti's earnings in the near term.

"I don't think it is that big an acquisition. Bangladesh is not a very huge market. It will not add value for Bharti at least in the short run," said Ambareesh Baliga, vice-president of Karvy Stock Broking.


Kohli said focus would be on rolling out network in Bangladesh quickly and launching the Airtel brand.

Abu Dhabi Group's CEO, Bashir Ahmed Tahir, said the Indian firm may have to spend more than the $300 million initial investment.

"The next step is how to deploy network and more investment will go," he said, adding this would be finalised after the initial investment plan approved by authorities.

Abu Dhabi Group has already spend $680 million in Warid Bangladesh, including vendor financing, and with Bharti the overall investment will be about $1 billion, the companies said.

The deal is expected to close in the next one week to 10 days, Tahir said.


Abu Dhabi Group, which owns 70 percent of Warid's Pakistan operations, has no plans to lower its stake or exit the operation Tahir said.

"In Pakistan there are lot of speculation. We already have a partner in SingTel," he said, referring to Singapore Telecommunications that owns the remaining 30 percent.

There were reports that Norway's Telenor, which has mobile operations in Pakistan, was in talks with Warid. Telenor has declined to comment.

By bdnews24.com New Delhi Correspondent


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