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Telecom Tuesday:Bharti Airtel Gets The Green Signal For Warid telecom Stake

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Bharti Airtel has  received the approval from the Bangladesh telecom regulator for its 70% stake in the Abu Dhabi Group’s Warid Telecom. Bharti Airtel will be acquiring stake in Warid Telecom at a proposed investment to the tune of $300 million.

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Dubai based Warid Telecom is the fourth largest telecom operator in Bangladesh with close to 2.9 million subscribers. Bharti Airtel would become the first Indian Telco to set foot in the Bangladesh Telecom market.

Bharti Airtel has been itching for inorganic growth for quite sometime. The Bharti-MTN deal even after multiple talks did not fall in place. However, the Warid Stake will allow Bharti to expand into new geography and add to its ever increasing subscriber base.

Bharti is betting on the growing telecom demand in Bangladesh which according to industry estimates is set to cross 100 million customers by 2015. The 100 million odd customer base of Bharti Airtel can see immensely jump should it be able to make a disruptive entry into the Bangladesh Telecom Marketplace which like others is estimated to be fuelled by Price Wars.



Reliance Communication To Raise 6300 crore, scale its wireless and Enterprise Business

Reliance Communication along with its group companies is looking to raise over Rs. 6300 crores to scale up its wireless and enterprise business. Code Named ‘Edge 2010’ , Reliance aims to

  • Strengthen its GSM and CDMA network along with its DTH business.
  • A thrust towards the enterprise business in the internet data centre and cloud computing space.
  • Utilize The Raised Cash to be in a good position during the 3G auctions.

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As a company, I think Reliance has been forthcoming on maintaining huge cash reserves for expansion and making disruptive entry into new markets.

Even with the ongoing telecom pricing wars, Reliance recently launched the 20 paise/minute billing to keep itself in the limelight.Reliance is betting on raising cash to the tune of 10,500 crore to expand aggressively in the telecom and digital space.

What do you think? Will the cash rich Reliance Communication be able to stand its ground in the ever competitive digital market in India?

  1. […] for an acquisition hungry and the hunt was on. Recently, Bharti did manage to pick up stake in Warid Telecom for around $300 million.This deal will pave way for Bharti’s entry into India’s […]

  2. Madhav Shivpuri says

    Like I have said, I would definitely want to see Indian companies scaling new heights and being world leaders. The problem is, when you are a shareholder of the firm you want maximum return on investment and not whether your company caters to 10 million customers or 100 million. The numbers do not matter. The next point is, just because your company caters to a wider market does not mean that competitors cannot step in and eat your lunch. So even if you have 100 million customers today, due to number portability or other reasons like better product or service, customers can switch vendors and nothing can stop them.

    Think about Air India. They were the only airline in India serving international routes. Once the industry was privatised, there are Jet, Deccan, Kingfisher etc. Nobody has a decent ROI and it is going to only get worse and not better. This is what is called a “no moat” industry where your competitors can put margin pressure and your share holders will suffer. So, my point is simply that after companies attain certain market share they need to focus on building a moat around their business and try to keep competitors at bay, retain customers and try to cut costs and increase revenues.

    To give another anology, think of olden days when the kingdoms had fortresses and hence walls to keep away enemies. If you don’t have those walls, enemy kings will attack any time and take over your kingdom. In such a case, will you use your soldiers to defend your kingdom or try to get more lands (marketshare) abroad?

  3. Abhishek Anand says

    Bharti Airtel is apparently looking for developing economies where it can replicate the successful telecom model that it has pioneer in India.Whether it is South Africa(MTN) or
    Bangladesh(Warid),both location are apt for Bharti to leverage its telecom model and take the advantage of first comer.As such Indian Market is marching towards saturation with so much players and reduced margins.So i think its a balanced strategic move on part of Bharti.
    Reliance always plays with massive capital inflow .It applies to all companies in Reliance stable-Whether it is Reliance Fresh or Reliance communications.Consequently,it has achieved number2 spot,just behind Airtel,in comparatively less time.But to become numero uno ,it will have to be more proactive and lead in all the segments -pricing,service ,3G etc.

  4. manoj rai says

    In this era of cut throat competition where the survival of the fittest theory is very well applicable,i dont find it sane to debate on the issue of global expansion or restructuring of operations.As narrated by madhav “Due to increased competition there are margin pressures already at home and there is no reason to go out and seek more market share if one not able to dominate home turf”. Infact i find this to be a very strong point for the telecom companies for venturing in to other global markets as the tarrif war is definitely going to shatter their bottomline. The desperation seen in bharti airtel to get a global foothold is justified as india has already achived more than 45% teledensity,,and its the rural areas which remain to be tapped and with so many global players already afoot in the indian market,the competition is going to be intense and the pie of share is going to be divided.in the indian market airtel is already the leader and according to global ceo of vodafone its going to take another 20 yrs for them to become no.1 in indian market,,,
    thus through the market expertise gained in india it can leverage its entry in other markets and get the first mover advantage….

    If you are a rcom customer you will know that the move to invest thousands of crores is definitely a gud one,,as reliance seriously needs a network overhaul and customer care upgradement to continue being the no 2 service provider,,,u need to come up with unique features n products to be differentiated from competitors and reliance is a front runner when it comes to innovation and providing value to the customers,,,,,

  5. Madhav Shivpuri says

    As an Indian with more 1000% desire to see ‘India shining’ I would like to see Indian companies become global leaders, and the benefits accrue to the companies, their employees and all citizens.

    On the other hand, as an investor, I don’t see how getting X% of global market share (be it Warin in Bangladesh or MTN in Africa) is going to benefit the shareholders if at the end of day the companies can only pay dividends of just pennies per dollar, because the companies are giving away chunks of equity or taking on huge debts.

    Due to increased competition there are margin pressures already at home and there is no reason to go out and seek more market share if one not able to dominate home turf. There are no barriers to entry and where Bharti goes today, Reliance can go there tomorrow. Similarly global players can join the fray and heat up the competition.

    I think Indian companies have just seen the good side of the story and they are raring to roar like Indian tigers without catering for a rainy day. My views might range from cautious to pessimistic but I am not saying the same about other industries or companies (at least not yet!).

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