BHARTI AIRTEL , ZAIN TO SIGN AGREEMENT SOON

STRENGTHS

 Largest telecom player in India.

 Strong financials.
 Strategic alliance with other stakeholders, including
Nokia, sing tel &sony ericsson.
 Pan- India presence
 Most brokerage have got a ‘buy’ rating on the stock
 Earning per share accretive, since one-third of the
present subscribers are right away added to the total
subscribers base of 140m in India
 Average revenue per user(ARPU) in Africa ranges from
$3 to $10, which compares favourably with India , where
Airtel’s ARPU is $5(Rs 230)
WEAKNESSES

 Outsourcing of core system

 Integration pain likely to remain for about 12-18 months
 The African asset of Zain reported a loss of $35m in 2008
 In the first 9 months of 2009, it has seen a 17% drop in
net
 According to Zain’s Q3 presentation , 47%-50% of all
revenue comes from non-African sources
 Bharti paying a 55% premium for Zain EBIDTA in
comparison with Bharti’s own valuations
 Nigeria is not profitable and reported a loss of $88m on
revenue’s of $986m, as of sept ’09

OPPORTUNITIES
 Tie ups for the customer application
 Strong presence in the emerging markets
  Match Box strategy scale of penetration
 Current tele-density of 30.6% in Africa is still low
considering other developing countries and opportunity
of a new brand to bring to market
THREATS

 Intense competition & shortage of bandwidth

 Falling ARPU and AMOU
 For a set of assets that are not EBIDTA positive at this
point , analysts maintain that Bharti have to absorb it
from its profitable India operations
RIDING THE DEAL
ACQUIRE ACQURIED DEAL DEA CHANGE
R COMPANY SIZE($Bn L IN STK
) DAT PRICE(%
E )
Tata steel Corus 13.6 Apr 2, 60.0
‘07
Vodafone Hutchison 10.9 Feb -1.0
Essar 11,
‘07
Hindalco Novelis 6.0 - 12.4
ONGC Imperial 2.6 Dec 61.2
30,
‘08
Tata motors JLR 2.3 Jun 2, 29.8
‘08
Jindal steel EI Mutun 2.3 Mar 809.9
4, ‘07
United Whyte&Macka 1.2 May NA
spirits y 16,
‘07
GMR Infra InterGen 1.1 Jun 24.6
25, 08
Suzion RE Power 1.0 Jun 1, -71.6
07
Tata chem. General 1.0 Jan 1.0
chemicals 31,
‘08