Bharti Airtel management confirmed that it is in exclusive talks with Zain for buying the African assets of Zain (15 countries excluding Sudan. Bharti Airtel, India’s largest telecom company by subscribers, has tried twice to enter the African market through a merger with MTN of South. Bharti Airtel – Zain Deal Analysis Prepared by Deepali Rai 09FN Parvesh Bansal 09FN Rohit Sharda 09FN Sahil Pabby 09FN 31/12/
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There can be no assurance that a transaction will be consummated. Further announcements will be made in due course.
Bharti Airtel – Zain Telecom Deal Analysis | Dalal Street
The note is, of course, a measure of caution. Talk to the people at Bharti and they will tell you off the record that they expect this deal to be smooth sailing. Only the Zain board has to give a go ahead, and we have to pay.
Yet the proposed deal has given rise to misgivings. Almost every research house has been critical of the deal. The principal issue is one of valuations. Everyone seems to agree that Zain is a good target airyel acquisition, but is it worth the price Bharti is paying? Seven of the 15 countries reported losses.
Zain has 42 million subscribers in Africa September while Bharti has These numbers can be used to paint an optimistic picture or a pessimistic one. For instance, low penetration rates could mean either a huge upside opportunity or lack of demand needing many years of expensive market development. Low ARPUs could imply poor revenue streams or future growth potential. Besides, some operations are showing losses because of mismanagement.
Bharti might argue it would change all that. But Zain is in a different league. The balance sheet position appears comfortable for funding the deal. Business daily The Economic Times looks at the acquisition deap another dimension. Over time, high minutes of traffic can be generated with lower dilution in ARPU. In India, the numbers range from to depending on the operator.
Bharti profit falls 27% on Zain deal
Other issues, too, could impact valuations. There is an ownership issue with the Zain Nigerian unit. MTN is a major competitor in most of the markets. As is the case with zaain merger, cultural factors will influence how the two companies will integrate their operations.
It was known at that time as MTC. Inthe company introduced GSM technology in Kuwait, becoming one of the first companies in the region to do so.
He worked hard to convert a Kuwaiti telecom operator into a global one. With 24 countries and The target set for was to be among the top 10 telecom companies in the world with more than million customers.
A few days before the Bharti deal was announced, Al Barrak announced his resignation, which was promptly accepted. But the Zain corporate culture is imbued with his go-getting style.
Bharti could run into integration problems in Africa. Also, though Mittal says that no government permissions are necessary in fact, both India and Kuwait have welcomed the dealthe telecom regulators of all the countries will have to approve the takeover. If there is a problem on any zaib these fronts, it could make the deal look more expensive.
If valuations are a cause for concern, raising the money is not. All calculations have been made and there is no issue over which we need to fret. It is an all-cash deal and there is no issue of stock trading.
Although the funding pattern is yet to be worked out, the consensus view is that it will be entirely in debt.
These loans will be replaced with longer-term debt after the March 25 deadline. Mittal says his team is working out the details of various funding options.
Bharti-Zain deal – Weak Signals for Airtel
We are also very happy that the Indian business model, that is the talk of the world, is now going global. The Bharti-Zain deal is also likely to usher in a year of mergers and acquisitions for India Inc. Many view private equity firms as villainous actors intent on the singular goal of profit. But new Wharton research provides better insight into the benefits of PE buyouts. Ziroom is the leader in apartment rental services.
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