SingTel – BT

Bharti eyes Bangladesh telco Warid

It could pay up to US$900m for 70% stake in the firm

India’s leading telecom company Bharti Airtel may be looking to buy Bangladesh’s Warid Telecom for up to US$900 million, indicating a shift in focus to smaller targets after its planned US$24 billion merger with South Africa’s MTN Group failed.

Bharti is set to buy a 70 per cent stake in Warid, Bangladesh’s fourth-biggest telecom company, with an initial plan to invest US$300 million, Bangladesh’s telecoms regulator said yesterday.

The proposed deal would give Bharti access to Bangladesh’s rapidly growing mobile sector at a time when it is locked in an intense price war in India with rivals Reliance Communications and Vodafone Essar.

Bharti said it would keep evaluating international opportunities, but declined to comment on a possible deal to buy Warid, whose shareholders are Abu Dhabi Group and Bharti partner Singapore Telecommunications (SingTel).

United Arab Emirates-based Abu Dhabi Group, which controls Warid Telecom, sought approval from the Bangladesh Telecommunications Regulatory Commission for the sale on Sunday, commission chairman Zia Ahmed said, adding that a proposal by Abu Dhabi Group did not give a deal value.

Bangladesh’s Daily Star newspaper reported the deal could be worth US$900 million, citing Warid officials.

Shares in Bharti closed up 2.8 per cent in a Mumbai market, up 0.2 per cent.

‘The dynamics of the Bangladesh market are similar to those in India, where Bharti has proven itself,’ said Phani Sekhar, fund manager at Angel Broking, which holds Bharti shares.

‘Bharti has perfected the emerging markets model in India, and this will give it a competitive edge in Bangladesh. The deal is going to be incrementally positive for it,’ he said.

Bharti, which has more than 100 million subscribers in India, is looking to replicate its staggering growth at home in other emerging markets, where scale is vital and penetration rates are low but rising fast.

Indian mobile operators are locked in an intense tariff war that has raised concerns about profitability. The price war is aimed at grabbing new users as new firms enter the market.

Bangladesh’s mobile sector has grown rapidly, with subscriber numbers reaching more than 51 million at the end of October from 200,000 in 2001, helped by low penetration levels, competitive tariffs and steady economic growth.

Analysts predict the number of subscribers could top 70 million by 2011, nearly half the country’s population of 150 million.

The news comes 21/2 months after talks between Bharti and MTN to create the world’s third-largest mobile operator collapsed for the second time in just over a year on South Africa’s reluctance to allow a flagship corporate to lose its national character.

‘You cannot wait for two years, three years for a big deal to get completed while opportunities for smaller deals go by,’ Mr Sekhar said.

Any deal would probably exclude Warid’s operations in Pakistan, India’s neighbour and political rival, analysts say.

Bangladesh’s Mr Ahmed said the telecoms regulator would ask for details on the deal next week from Warid, which started its operations in the country in 2007.

‘It is good news for both Warid and Bangladesh’s telecom sector. Warid needs investment for expansion in order to survive in this highly competitive market,’ said Fazlul Haque, a former member of the governing body of state-owned Bangladesh Telecommunications Co Ltd.

At the end of October, Warid had 2.79 million subscribers – far fewer than Grameenphone, majority owned by Norway’s Telenor. Egyptian Orascom Telecom’s Banglalink and Telekom Malaysia’s Aktel also operate in the country.

Bangladesh’s telecoms sector has been a magnet for investment by foreign operators, with Japan’s NTT DoCoMo last year paying US$350 million for a 30 per cent stake in No 3 cellphone carrier TM International (Bangladesh), also known as Aktel. — Reuters

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