Gatilar In response to query on performance of insurance business, Mittal said that Bharti Axa has recently got new team and fresh investments and insurance business has its own gestation period. NIFTY 50 10, 2. But we will have full control and our own brand. The operations spread across 15 African countries that Bharti is seeking to buy are grouped under an entity called Zain International.
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There can be no assurance that a transaction will be consummated. Further announcements will be made in due course. Talk to the people at Bharti and they will tell you off the record that they expect this deal to be smooth sailing. Only the Zain board has to give a go ahead, and we have to pay.
Almost every research house has been critical of the deal. Everyone seems to agree that Zain is a good target for acquisition, but is it worth the price Bharti is paying? Seven of the 15 countries reported losses. Zain has 42 million subscribers in Africa September while Bharti has These numbers can be used to paint an optimistic picture or a pessimistic one.
For instance, low penetration rates could mean either a huge upside opportunity or lack of demand needing many years of expensive market development.
Low ARPUs could imply poor revenue streams or future growth potential. Besides, some operations are showing losses because of mismanagement.
Bharti might argue it would change all that. But Zain is in a different league. The balance sheet position appears comfortable for funding the deal. Over time, high minutes of traffic can be generated with lower dilution in ARPU. In India, the numbers range from to depending on the operator. There is an ownership issue with the Zain Nigerian unit.
MTN is a major competitor in most of the markets. Cultural Factors As is the case with every merger, cultural factors will influence how the two companies will integrate their operations. It was known at that time as MTC. In , the company introduced GSM technology in Kuwait, becoming one of the first companies in the region to do so.
He worked hard to convert a Kuwaiti telecom operator into a global one. With 24 countries and The target set for was to be among the top 10 telecom companies in the world with more than million customers. A few days before the Bharti deal was announced, Al Barrak announced his resignation, which was promptly accepted.
But the Zain corporate culture is imbued with his go-getting style. Bharti could run into integration problems in Africa. Also, though Mittal says that no government permissions are necessary in fact, both India and Kuwait have welcomed the deal , the telecom regulators of all the countries will have to approve the takeover.
If there is a problem on any of these fronts, it could make the deal look more expensive. If valuations are a cause for concern, raising the money is not. All calculations have been made and there is no issue over which we need to fret.
It is an all-cash deal and there is no issue of stock trading. Funding the Deal Although the funding pattern is yet to be worked out, the consensus view is that it will be entirely in debt.
These loans will be replaced with longer-term debt after the March 25 deadline. We are also very happy that the Indian business model, that is the talk of the world, is now going global.
India's Bharti Airtel completes acquisition of Zain Africa
Bharti Airtel adopted the leveraged buy-out model for the acquisition. The loan for financing the transaction has been availed by the two special purpose companies SPCs created in the Netherlands and Singapore. While Bharti Airtel has achieved its target of moving into Africa, it has quite a few hurdles to overcome. From a legal perspective, the acquisition had to adhere to the Foreign Exchange Management Transfer or Issue of any Foreign Security Regulations,
Bharti to acquire 100% of Zain's African operations: Sources
There can be no assurance that a transaction will be consummated. Further announcements will be made in due course. Talk to the people at Bharti and they will tell you off the record that they expect this deal to be smooth sailing. Only the Zain board has to give a go ahead, and we have to pay. Almost every research house has been critical of the deal. Everyone seems to agree that Zain is a good target for acquisition, but is it worth the price Bharti is paying? Seven of the 15 countries reported losses.