Bharti buys 70% stake in Warid

Will Also Make Fresh Investment Of $300 Million In Bangladesh Firm

New Delhi: Bharti Airtel, India's leading telecom services provider, on Tuesday said it has agreed to acquire a 70% stake in Warid Telecom, Bangladesh, currently a wholly-owned subsidiary of the Dhabi Group, for a nominal but undisclosed consideration. Bharti Airtel will also make a fresh investment of $300 million to expand the operations of Warid Telecom, which is also the largest investment in Bangladesh by an Indian company. 

    The company declined to give details of the acquisition value which gives the Bharti Airtel management and board control of Warid Telecom while allowing the Dhabi Group to continue as a strategic partner with 30% shareholding and some Board representation. 
    The acquisition by Bharti Airtel would be done partly by purchase the existing shares held in Warid Telecom International by Dhabi Group for a nominal consideration and the balance by way of issue of fresh shares at par. 
    Grameenphone, which is owned by Nordic firm Telenor, is the largest mobile operator in Bangladesh with over 23 million subscribers and a 45.5% market share (see chart). 
    Warid Telecom is the fourth largest operator with a total customer base of over 2.9 million across Bangladesh. 
    The new funding of $300 million 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 $1 billion. Airtel clarified that this figure includes $700 million of existing investment by Warid Telecom. 
    According to Kunal Bajaj, MD of consulting firm BDA Connect, the deal is not going to be a major gamechanger for Airtel in terms of scale or revenues. "While Bangladesh has one of the lowest teledensities in the world at 32%, the total population is just 160 million of which the market leader Grameenphone already has a 45.50% share. It is a very small field,'' he told TOI. 
    However, Arpita Agarwal, associate director telecom for PwC, felt that Airtel could quickly bridge the gap between Warid and Grameenphone. 
    On how Bharti proposed to compete with Grameenphone, Manoj Kohli, CEO & Jt MD, Bharti Airtel, said, "The business plan and targets will be finalised over the next 4 to 6 weeks. The Airtel brand is already well known in Bangladesh and we plan to introduce new services." 
    Sunil Bharti Mittal, CMD, Bharti Airtel, said, "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. At the same time, it is a symbol of the growing economic cooperation between the South Asian countries and we would like to thank the Government of India and Bangladesh for their support 
and encouragement. 
    "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." 
    HH Nahayan Mabarak Al Nahayan, chairman, 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. Warid buy may not open up B'desh market for Bharti Sumali Moitra | TNN 
Kolkata: The acquisition of the 70% stake in Warid by Bharti Airtel will, at best, give the Indian mobile service provider a toehold in the Bangladesh market since the company only has a 5% market share. 
    With about 2.9 million subscribers, Warid ranks just ahead of CityCell (owned by Singtel and Pacific Group with two million subscribers) and state-run Teletalk which has over one million users, among Bangladesh's six service providers. 
    The top three players are Grameenphone (majority owned by Telenor with 23 million subscribers), Orascom-owned Banglalink which has 12 million users and Aktel (owned by Docomo and Axiata) which has over 8 million subscribers. 
    On its part, market leader Grameenphone - the number one player in Bangladesh - indicated that it was not losing sleep over Bharti's entry. "We welcome new competition on a level playing field and are preparing ourselves to give the new entrant a challenging time as it ventures into the Bangladesh market," Grameenphone CEO Oddvar Hesjedal told TOI. 
    Grameenphone has more than double the number of base stations of the other five operators combined. Listed on Bangladesh's stock market, Grameenphone, in which Grameen Telecom has a minority holding, has the best bottomline among its peers. 
    Sources in the Bangladesh mobile phone industry said there is fear that Bharti may play the price game to push up its numbers and drop tariff rates further to attract customers. Such a move could affect the entire industry as existing players, too, may be forced to act likewise by diverting spends earmarked for network expansion to other avenues and also deter other investors from entering Bangladesh. They added that the country could also see more M&As as the market has become overcrowded.