Bharati Airtel Acquisition of Zain

8/4/2019 Bharati Airtel Acquisition of Zain

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By:SANTOSH S


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` Bharati Enterprises was founded by Sunil Mittal in

the year 1976

` Indias leading provider of cellular services

` Airtel had a market share of 28.31%, with 124million subscribers

` It has been focusing on expanding horizontally

and by entering new markets in Asia and Africa.


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` Mobile services

` Telemedia Services

` Enterprise Services

` Digital TV Services


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By 2015 Airtel will be the most loved brand, enriching

the lives of millions.

MISSIONMISSION

To be globally admired for telecom services that

delight customers.


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` Empowerment

` Entrepreneurship

` Transparency

` Impact` Flexibility


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` The telephone subscriber base in the country reached

653.92 million as of May, 2011.

` The overall Tele-density (telephones per 100 people)

has touched 55.38.` The wireless subscriber base has increased to 617.53

million at the end of May 2011 from 601.22 million in

April 2011, registering a growth of 2.71 per cent.

` It is projected that India will have 1.159 billion mobilesubscribers by 2013.


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28.3

23.915.1

14.7

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3.

1.3 1.10.

0.4 0.31. Bharati Airtel

Vodafone Essar

Idea

BSNL

Aircel

Reliance

Uninor

NL

Loop obile

Videocon

Stel

Others


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` Managed services

` Infrastructure sharing

` Enterprise Telecom Services

` 3G spectrum` Wi-MAX

` Value Added Services

` Rural Telephony


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S RENGTHS:

- High quality service provider

- Good infrastructure and coverage

- Strategic alliance with global gaints likeSony-Ericsson, Nokia and IPhone

- Largest cellular service provider with164.61 million subscribers

WEAKNESS:

- Hi r ri r i r i r r t tit r

- Lack f I t r ati al anagement erience

- Not tapped into t e r ral market

OPPORTUNITIES

-Aggressi e ove into t e R ral arket

- International Investments likeacquiring Zain

-Aggressive Bundlingacross Services

THREATS

-Increased Competition fromdomesticplayers

- Entry of Global Players

- Saturationof t e Indianmarket

Airtel


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` In India Vodafone, Idea, BSNL

` Indian market is getting saturated, so there is a need to

expand the operations globally.

` In Africa Vodacom and MTN` Low margins in the Indian market

` Few competitors.

` Untapped African market.


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` Why is Zain actually available for sale?

` What are the benefits from the acquisition?

` What are the Opportunities?

` What might be the possible risks?` What must Airtel do?


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` In the nine months to September 2009, they reported

a net loss of US$112 million against a profit of US$169

million in the corresponding period the previous year.

` Seven of the 15 countries reported losses.` The highest revenue earner, Nigeria, which was

nudging the US$1 billion mark, lost US$88 million.


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42 million customers

$3.6Bn revenue

$1.2B EBITDA


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` Low Tariff rates leading to declining revenues and

profit margin.

`

Saturation of Indian market.` Penetration stands at 45%. It is expected to reach 80%

by 2015.

` Acquisition would broaden the subscriber base to 180

million customers and the combined revenues isexpected to be $12.4 billion


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` In Africa the Customer growth rates range from 14% in

Kenya and -6% in Nigeria to 51% in Niger . Hence huge

upside.

` The average revenue per user (ARPU) is US$3 in Ghanaand US$25 in Gabon. Compared to $5 of Bharti in

India. Hence growth visibility.


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` Mass market focus and segmented customer strategy

` Competitive positioning and differentiation strategy

` High-value technology strategy` Company management strategy


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` Current tariff levels in Africa are approximately 10

times Bhartis current India tariffs, which stands at 76

paisa on average

` Minutes of use (MoU) is less than 100 minutes(one-fourth of Bhartis India MoU.

` The strategy is, therefore, to reduce tariffs to increase

usage and also improve market share, particularly

revenue market share.


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` The management would focus on improving marketshare in Zain African regions especially in regionswhere Zain is not the market Leader

` Value-added services have a ready market in

Africa, from mobile commerce to media content onhand-held devices. Airtel can use its expertise to gainfrom this market as well.

` Strategic partnerships with Ericsson, Huawei and NSN

will exponentially improve the quality of the networkacross the African landscape and expand the footprintof the 2G and 3G service


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` Airtel along with IBM plans to deploy a powerful

content management system to offer rich media

content such as music and video over mobile

devices, while simultaneously facilitating the growth ofthe application developer community in Africa.


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` Bharti managed to increase its total subscriber base by 35% on aYear on Year basis

` Profit from operations at the end of fiscal 2010 grew at 19% totouch 166.050 million.

` The total revenues for the year ended on March 31st 2010 are Rs

396,150 million with a growth rate of 7% from the last year.` EBITDA after acquisition cost Rs. 160.3 billion (up 6% Y-o-Y).` Net Profit of Rs. 91.0 billion (up 7% Y-o-Y).` The net debt of the company touched US$ 284 million which

was majorly due to the funding of acquisition expense.

` Due to increase in operating cycles there was a significantincrease of 12% in the operating expense.

` Effect on Stock Prices


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THANK YOU

Documents

Bharati Airtel Acquisition of Zain