Bharti Airtel Keen On Zain;
Well, It’s Plausible:
It ain’t been long since Bharti’s talks to take over South-Africa’s MTN fell through and Airtel is back on track, and this time even more steadfast than it was before. It was only a few days ago when Bharti announced its plans and is already in talks with Zain, a Kuwaiti telecoms company, to buy its sub-Saharan assets for $10.7 billion (Around Rs 50,000 crores).
Looks like the Indian companies’ spree to buy assets abroad remains unaffected by the turmoil around the world. Amid the circumstances of fiscal deficits and hence tentative outcomes of the budget 2010-2011, where the investors are already wary of yet-to-come government policies and fears of stimulus unrolling, Bharti’s announcements slammed heavily upon its shares which plummeted by remarkable figures.
One of the reasons behind the investors’ ire is the speculation doing rounds about the over-valuation of Zain’s assets by Bharti. Vivendi, the French media and telecoms giant, had broken off talks in July with Zain about acquiring these assets for around the same price over issues of ‘profitability’. This is what’s worrying the investors and share-holders.
But Bharti’s plans may not be bad altogether. It should be noted that the telecom business has got saturated in developed countries and is rapidly getting saturated in the developing ones like India too. This can be supposed to have prompted the Bharti players to devise the plan. You see, the number of mobile operators in the country is already 12 and recent arrivals include Norway’s Telenor and Japan’s NTTDoCoMo. This has pushed a cut-throat low-call-rates race.
While as for the new deal (if it proceeds), Bharti should find a way-in in the 15 countries, including Nigeria, Uganda and Tanzania, where Zain provides mobile phones to some 42m customers. And noteworthy is the fact that most of’em are poor ones and provide for immense platform for telecom sector to flourish.
Though it can be taken for granted that the newly acquired assets would take a while to emerge as profitable units, but it is indeed a coherent deal (or so I consider) when you look at its future prospects.