bharti zain online info

822019 Bharti Zain Online Info

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Bharti-Zain Deal Analysis

The Bharti Zain deal is old news now A quick look at the Zain September 2009 data ndash ninemonths of the year only ndash gives us a view of what Bharti is buying

As you might notice Nigeria is the bull in the room It‟s still not profitable with a loss of $88mon revenues of $986m and accounts for 13rd of Zain Africa‟s revenues (Zain does not classify

Sudan or Morocco as ldquoAfricardquo and is not selling those to Bharti)

Yet Nigeria has hope Zain has only 25 market share and the market penetration is just 45 ndash scope to grow Average Revenue Per User (ARPU) in Africa ranges from $3 to $10 with Nigeriaat $7 This compares favourably with India where Airtel‟s ARPU is $5 (Rs 230)

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If you can‟t see the above graphic(s) a snapshot image is below (Click for a larger picture)

The story from Mint is that Bharti is looking to finance the Zain deal from a $7 billion USD loan ndash remaining $2bn will be from Indian rupee loans - at a rate of 300 bps (300) over LIBORThis is suspect ndash they were offering to pay 320 points for the smaller $3 bn loan for MTN lastyear still LIBOR is at an all time low of about 088



The 10 year average of LIBOR is 375 and we shouldn‟t expect these low LIBOR rates to lasttoo long At even 2 of LIBOR and a 300 bps premium and 8 for the Indian bit Bharti will

pay $500m per year in interest

That means they have to improve EBIDTA by $500m just to pay for the deal currently EBIDTAis $13bn so it‟s got to scale by 40 for Bharti to get a chunk They can definitely improve somebits ndash tower costs in Africa have been 4x more than India which can be lowered and internalefficiencies can be improved The local mafia in Africa will be tougher to handle (they take thelucrative deals and back- peddle commissions) where in India Mittal‟s political connectionswould have helped in the early stages

I‟m not taking a short term call on this stock If anything each person is supposed to make hisown decisions and I‟ll see what the market price has to say If this deal is immensely profitable

Bharti should hit new highs if it‟s not and Africa is a laggard the prices won‟t move It isn‟t ashort right now but it isn‟t a buy either They‟re overpaying for the deal but money is cheapnowadays and ldquoexpensiverdquo is more affordable than you think It‟s a definite sign of desperation but I wouldn‟t write off a juggernaut like Bharti just yet



About Bharti-

Founded in 1976 by Sunil Bharti Mittal Bharti has grown from being a manufacturer of bicycleparts to one of the largest and most respected business groups in India With its entrepreneurialspirit and passion to undertake business projects that are transformational in nature Bharti has

created world-class businesses in telecom financial services retail and foods

Bharti started its telecom services business by launching mobile services in Delhi (India) in1995 Since then there has been no looking back and Bharti Airtel the group‟s flagshipcompany has emerged as one of top telecom companies in the world and is amongst the top fivewireless operators in the world

Through its global telecom operations Bharti group operates under the bdquoAirtel‟ brand in 19countries across Asia and Africa ndash India Sri Lanka Bangladesh Seychelles Burkina Faso ChadCongo Brazzaville Democratic Republic of Congo Gabon Ghana Kenya MadagascarMalawi Niger Nigeria Sierra Leone Tanzania Uganda and Zambia In addition the group

also has mobile operations in Jersey Guernsey

Over the past few years the group has diversified into emerging business areas in the fastexpanding Indian economy With a vision to build India‟s finest conglomerate by 2020 the grouphas forayed into the retail sector by opening retail stores in multiple formats ndash small and medium- as well establishing large scale cash amp carry stores to serve institutional customers and otherretailers The group offers a complete portfolio of financial services ndash life insurance generalinsurance and asset management ndash to customers across India Bharti also serves customersthrough its fresh and processed foods business The group has growing interests in other areassuch as telecom software real estate training and capacity building and distribution of telecomIT products

What sets Bharti apart from the rest is its ability to forge strong partnerships Over the yearssome of biggest names in international business have partnered Bharti Currently Singtel IBMEricsson Nokia Siemens and Alcatel-Lucent are key partners in telecom Walmart is Bharti‟spartner for its cash amp carry venture Axa Group is the partner for the financial service businessand Del Monte Pacific for the processed foods division

Bharti strongly believes in giving back to the society and through its philanthropic arm the BhartiFoundation it is reaching out to over 30000 underprivileged children and youth in India



Milestone-

1976-79

Bharti Enterprises founded by Sunil Bharti Mittal

Starts as a small scale manufacturing unit for bicycle components Diversifies into production of

yarn stainless steel sheets for surgical utensils

1980-84

Bharti Overseas Trading Corporation set up Bharti imports and markets stainless steel products

brass and plastic products and zip fastners etc

Bharti ties up with Suzuki Japan to import and distribute portable gensets By 1984 Bharti is the

largest importer of portable gensets in India





1990

Bharti ties-up with Lucky Gold Star South Korea to become the first company in India to

manufacture cordless telephones

1992

Bharti Cellular Ltd is born Bharti forms a consortium with SFR-France Emtel-Mauritius and

MSI-UK to bid for mobile service provider licenses in Indian metros

1993

Bharti Telecomrsquos Gurgaon factory becomes the first manufacturer of push button phones to be

awarded ISO 9002 accreditation

Bharti provides technical assistance to Uganda for manufacture of push button phones



1994

Bharti wins GSM mobile service provider licence for Delhi NCR

Bharti Telecomrsquos Ludhiana factory gets ISO 9002 accreditation

1995

Bharti launches Delhirsquos first GSM mobile services under the Airtel brand

Forms consortium with Telecom Italia to bid for cellular and fixed-line services under Bharti

Telenet

Bharti joins forces with Siemens to market telephone terminals under SIEMENS and BEETEL

brand names Bharti Tele-Ventures is incorporated



1996

Airtel launched mobile services in the state of Himachal Pradesh the first by any private telco

Telecom Italia acquires 20 equity interest in Bharti Tele-Ventures

Bharti Telenet bids for fixed line licence in the state of Madhya Pradesh

Bharti forays into manufacture of HDPE Silicore ducts Forms a joint venture with Dura-Line

Corp USA

2002

Bharti goes public completes Indiarsquos first 100 book building issue and gets listed on the

National stock Exchange Bombay Stock Exchange and the Delhi Stock Exchange on February 18

2002

Bharti launches mobile services in Gujarat Haryana Kerala Madhya Pradesh circle

Maharashtra Mumbai Punjab Tamil Nadu Uttar Pradesh (West)

Bharti enters into a license agreement with the DoT to provide International Long Distance

services in India Becomes Indiarsquos first private telecommunications services provider to launch

International Long Distance services

Bharti launched fixed-line services in the Delhi Haryana Karnataka and Tamil Nadu



2010

Bharti Airtel acquires 70 stake in Warid Telecom Bangladesh

Bharti Airtel enters into a legally binding definitive

agreement with Zain Group to acquire Zain Africa Bharti Airtel acquires the mobile operations of Zain in 15 African countries Becomes the fifth

largest mobile operator in the world



The 10 year average of LIBOR is 375 and we shouldn‟t expect these low LIBOR rates to lasttoo long At even 2 of LIBOR and a 300 bps premium and 8 for the Indian bit Bharti will

pay $500m per year in interest

That means they have to improve EBIDTA by $500m just to pay for the deal currently EBIDTAis $13bn so it‟s got to scale by 40 for Bharti to get a chunk They can definitely improve somebits ndash tower costs in Africa have been 4x more than India which can be lowered and internalefficiencies can be improved The local mafia in Africa will be tougher to handle (they take thelucrative deals and back- peddle commissions) where in India Mittal‟s political connectionswould have helped in the early stages

I‟m not taking a short term call on this stock If anything each person is supposed to make hisown decisions and I‟ll see what the market price has to say If this deal is immensely profitable

Bharti should hit new highs if it‟s not and Africa is a laggard the prices won‟t move It isn‟t ashort right now but it isn‟t a buy either They‟re overpaying for the deal but money is cheapnowadays and ldquoexpensiverdquo is more affordable than you think It‟s a definite sign of desperation but I wouldn‟t write off a juggernaut like Bharti just yet



About Bharti-











Milestone-

1976-79




1980-84









1990



1992



1993






1994



1995



Telenet





1996





Corp USA

2002



2002









2010







About Bharti-











Milestone-

1976-79




1980-84









1990



1992



1993






1994



1995



Telenet





1996





Corp USA

2002



2002









2010







Milestone-

1976-79




1980-84









1990



1992



1993






1994



1995



Telenet





1996





Corp USA

2002



2002









2010









1990



1992



1993






1994



1995



Telenet





1996





Corp USA

2002



2002









2010







1994



1995



Telenet





1996





Corp USA

2002



2002









2010







1996





Corp USA

2002



2002









2010







2010





bharti zain online info

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