Bharti Airtel, the country’s largest mobile services provider, will acquire a 70 per cent stake in Warid Telecom, the fourth-largest mobile company in Bangladesh (out of six operators).
Bharti will make a fresh investment of $300 million (nearly Rs 1,370 crore) in Warid and will have management and board control of the company. The Abu Dhabi Group, the current owner, will retain a 30 per cent stake and will continue to have its nominees on the board, according to a statement. The Abu Dhabi Group has already spent $680 million (over Rs 3,100 crore) in Warid Bangladesh, including vendor financing, and with
The acquisition by Bharti Airtel would be financed in part by purchase of existing shares held in Warid Telecom by the Abu Dhabi Group for a nominal consideration and the balance by way of issue of fresh shares at par. The new funding would be utilised for expansion of the network, both for coverage and capacity, and introduction of innovative products and services, the statement said.
“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 the Abu Dhabi Group. Kohli said the focus would be on rolling out the network in Bangladesh quickly and launching the Airtel brand. The deal is expected to close in the next one week to 10 days. Bangladesh’s telecom authority had approved the proposed deal earlier this month.
The acquisition comes months after Bharti’s aggressive but aborted $24-billion (nearly Rs 1.10-lakh-crore) cash and share swap deal to acquire South African telecom major MTN failed to get regulatory clearances from the government there. If that deal had been successful, it would have created the second-largest telecom company in the world, with a subscriber base of 200 million subscribers. Bangladesh has a teledensity of 32 per cent, with a population of over 160 million. Warid has more than 2.9 million of Bangladesh’s 51 million telecom users. In India, Bharti Airtel has a subscriber base of over 110 million. This is the second country in the Saarc (South Asian Association for Regional Co-operation) region that the company has entered. Last January, Bharti Airtel had launched its services in Sri Lanka.
“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,” Bharti Airtel Chairman and Managing Director Sunil Bharti Mittal said.
More From This Section
Commenting on the deal, Abu Dhabi Group Chairman Nahayan Mabarak Al Nahayan 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.”
Telecom analysts, of course, say the Bharti acquisition of Warid is not in league with its attempt to go in for mega telecom deals across the globe to give it scale out of India. “There are two ways you can grow — either by picking up small operations in each country or going for a mega deal with a telco that has a pan-global or regional presence, like MTN. I am sure Bharti has not abandoned its earlier strategy of going in for the big bang. But, at the moment, it is looking at opportunities in neighbouring countries,” says a senior executive of a competing telco.