Thursday, January 14, 2010
Warid Acquistion Won't Affect Bharti Ratings
Under the agreement with Warid, the acquisition will be partly funded by the purchase of existing shares held in Warid by the Dhabi group for a nominal consideration and the balance by way of an issuance of fresh shares at par. The acquisition will give Bharti the management and board control of the company. Bharti will make a fresh investment of USD300m to expand the network coverage and capacity of Warid in Bangladesh. Although, Bharti has yet to confirm the period over which such capex would be made, Fitch expects the same to occur over a period of 2-3 years. Fitch does not expect the incremental capex to significantly change Bharti's capex plans. Further, Fitch notes that the maximum existing debt on Warid's balance sheet is USD300m, and accordingly the same is unlikely to materially impact Fitch's forecasted net leverage expectations for Bharti.
According to the Bangladesh Telecommunication Regulatory Commission (BRTC), Warid is the fourth-largest telecom operator in Bangladesh, with 2.92 million subscribers and a 5.8% subscriber market share at end-November 2009. It offers mobile services in all 64 districts of the country. At end-November 2009, the total subscriber base in Bangladesh was 50.55 million, with a penetration of 31.6%.
Bharti is one of India's leading private sector telecommunications providers, with integrated and diversified operations across mobile, fixed-line access, consumer broadband, direct-to-home television, long-distance and enterprise services. At end-November 2009, Bharti had a subscriber market share of 22.9% and a revenue market share of 33%. Bharti's FY09 reported revenues, EBITDAR and net income were INR373.5bn, INR170.6bn and INR78.6bn, respectively.