More than two years back, I had posted an article on this blog titled "Zain and the art of network expansion"
I have always been an admirer of this company. It saw the opportunity in African continent well in advanced and grabbed it. Zain slowly acquired stack in so many of African operations and now it had sold them to Bharti. In few years is making a clean profit of $3.3 billion from sale of its African assets other than in Sudan and Morocco to Bharti Airtel for $10.7 billion even as the Indian operator said the deal is well-priced.
Bharti after signing this deal is all set to become fifth-largest wireless operator in the world with a combined subscriber base of over 179 million and operations across 18 nations. Bharti is taking a debt of $8.3 billion, to be paid upfront, besides paying another $700 million after one year. Manoj Kohli, CEO, international and joint MD of Bharti Airtel, will head the African operations.
Showing posts with label bharti. Show all posts
Showing posts with label bharti. Show all posts
Fund raising will be the key concern for Indian Telecom service providers in 2010-11
As per Economic times - Nine cellphone companies have joined the fray for just three 3G spectrum slots while 11 companies, including Bharti Airtel, Vodafone Essar, Idea Cellular, Reliance Communications and Aircel, have bid for broadband wireless spectrum, which will allow them to provide wireless internet services.
One more interesting news was floating around. RCOM has said that it has crossed the 100-million mark in wireless customers and would explore both acquisition and expansion opportunities to strengthen its foothold in the domestic market. RCOM expects to add another 100 million customers within the next 1,000 days.
I think the time is ripe in Indian Telecom industry for consolidations. 3G auctions will be followed by M & A activity provided the auctions do not stretch the balance sheets too far. Amid ongoing price wars it would take serious efforts to raise funds for acquisitions. With interest rates moving north - the funds requirements for overseas acquisition , 3G auctions and M&A within India will be difficult to balance. The winners may emerge from those who will be able to balance fund requirements rather than balance the operations. Is Bharati listening?
One more interesting news was floating around. RCOM has said that it has crossed the 100-million mark in wireless customers and would explore both acquisition and expansion opportunities to strengthen its foothold in the domestic market. RCOM expects to add another 100 million customers within the next 1,000 days.
I think the time is ripe in Indian Telecom industry for consolidations. 3G auctions will be followed by M & A activity provided the auctions do not stretch the balance sheets too far. Amid ongoing price wars it would take serious efforts to raise funds for acquisitions. With interest rates moving north - the funds requirements for overseas acquisition , 3G auctions and M&A within India will be difficult to balance. The winners may emerge from those who will be able to balance fund requirements rather than balance the operations. Is Bharati listening?
Beyond MTN & Zain - Bharti, BSNL & MTNL have opportunity in Egypt
Egypt will offer two licenses to provide telecommunications services for upscale suburbs outside the capital, including fixed lines. The is move expected to bring in $1 billion worth of investments over the next five years. The licenses will be granted to a pair of consortia to operate so-called "triple-play" services that group internet, cable TV and phone services within such communities springing up around Cairo and elsewhere in the country.
The move marks the first potential crack in the state-owned Telecom Egypt's total monopoly over fixed line communications, though for now the services are only for within these communities.
The companies will not be required to submit an upfront payment, but the licenses would be based on a revenue sharing program in which the government would get 8 percent of the proceeds of operations within these compounds. Telecom Egypt would still operate in these communities, including fixed line services.
It is said that the bids are due on Jan. 12 and the decisions would be made in the second half of 2010. The communities affected are those which house between 50 to 5,000 units, while larger communities would be served by Telecom Egypt.
The move by the government comes as the country has been grappling with the fallout from the economic meltdown. While Egypt has fared better than many other nations, with officials projecting economic growth of over 5 percent for the fiscal year ending next June, it has still struggled with slumping foreign investment as the world's worst economic recession in decades has prompted investors to tighten their purse strings.
Over the last few years, Cairo has been expanding and its developers have invested billions of dollars in new housing communities in the desert catering to upper- and middle-income Egyptians.
The government's move also indicates a shift in the responsibility for providing infrastructure from the state to private developers.
Opportunity bells are ringing for Indian Telcos like Bharti, BSNL & MTNL who are desperate to invest abroad.
The move marks the first potential crack in the state-owned Telecom Egypt's total monopoly over fixed line communications, though for now the services are only for within these communities.
The companies will not be required to submit an upfront payment, but the licenses would be based on a revenue sharing program in which the government would get 8 percent of the proceeds of operations within these compounds. Telecom Egypt would still operate in these communities, including fixed line services.
It is said that the bids are due on Jan. 12 and the decisions would be made in the second half of 2010. The communities affected are those which house between 50 to 5,000 units, while larger communities would be served by Telecom Egypt.
The move by the government comes as the country has been grappling with the fallout from the economic meltdown. While Egypt has fared better than many other nations, with officials projecting economic growth of over 5 percent for the fiscal year ending next June, it has still struggled with slumping foreign investment as the world's worst economic recession in decades has prompted investors to tighten their purse strings.
Over the last few years, Cairo has been expanding and its developers have invested billions of dollars in new housing communities in the desert catering to upper- and middle-income Egyptians.
The government's move also indicates a shift in the responsibility for providing infrastructure from the state to private developers.
Opportunity bells are ringing for Indian Telcos like Bharti, BSNL & MTNL who are desperate to invest abroad.
In terms of mobile minutes, Bharti Airtel is world's fifth largest operator
Bharti Airtel has latched on to the position of the fifth largest wireless telco globally, ahead of carriers like Sprint Nextel and T-Mobile and Latin American major America Movil. Airtel could trump global operators in providing cheaper calls to its subscribers. The company is way ahead of its global competitors by providing lowest cost per minute of usage.
China Mobile claimed the numero uno position in a recent research report, with 726 billion mobile minutes, followed by Verizon with 226 billion mobile minutes, during the April-June 2009 quarter. AT&T came up third with 166 billion mobile minutes, while Vodafone was in fourth place with 156 billion mobile minutes during the same period. Comparing favourably with global telecom giants, Bharti carried 141 billion mobile minutes on its network, almost twice that of Vodafone Essar, which is not listed in India.
The lowest-cost producer of voice minutes globally ensures a superlative cost structure, which is a key hurdle for challengers and green-field telcos. Bharti Airtel compares favourably with global telecom giants and has carried a total of 140.7 billion voice minutes on its network in 1Q from a single country operation, compared to Vodafone’s total network minutes of 143.6 billion, generated from its operations spanning 30 countries.
China Mobile claimed the numero uno position in a recent research report, with 726 billion mobile minutes, followed by Verizon with 226 billion mobile minutes, during the April-June 2009 quarter. AT&T came up third with 166 billion mobile minutes, while Vodafone was in fourth place with 156 billion mobile minutes during the same period. Comparing favourably with global telecom giants, Bharti carried 141 billion mobile minutes on its network, almost twice that of Vodafone Essar, which is not listed in India.
The lowest-cost producer of voice minutes globally ensures a superlative cost structure, which is a key hurdle for challengers and green-field telcos. Bharti Airtel compares favourably with global telecom giants and has carried a total of 140.7 billion voice minutes on its network in 1Q from a single country operation, compared to Vodafone’s total network minutes of 143.6 billion, generated from its operations spanning 30 countries.
Bharti to launch 3G services, Revenues from VAS expected to go up !
Bharti Airtel has completed trials of third generation services that it plans to introduce. The company is now awaiting the allotment of spectrum from the government to launch 3G services in India. Other telecom majors such as BSNL, Vodafone-Essar, Reliance Communications and Tata Teleservices are also carrying out trial runs of 3G appellations and services. According to company executives, the pilots included testing all high-speed internet applications, next generation gaming, video and wireless streaming. Bharti has also put processes in place for seamless migration of all value-added services to the 3G space from its current 2G networks.
Bharti is said to have successfully tried out IMS-based applications, a software platform in line with the latest 3G standards. This implies that content and application developers can use this platform to develop services for Bharti customers. Currently, about 10% of Bharti’s revenues come from value-added services (VAS). This figure is likely to increase to about 15% following the introduction of a slew of new data services following the introduction of 3G services. Operators are currently unable to launch 3G services as the radio frequency for these services are occupied by the country’s defence forces. This comes as the project to get the defence ministry to release 45 Mhz of spectrum (20 MHz for 2G and 25 MHz for 3G) is long overdue. As per the initial plan, the release was due in the second half of 2006, which was later extended to March 2007 and then to July 2007. With the department of telecom (DoT) and the defence ministry locking horns over the release of spectrum, the launch of 3G services is set to be further delayed.
Bharti is said to have successfully tried out IMS-based applications, a software platform in line with the latest 3G standards. This implies that content and application developers can use this platform to develop services for Bharti customers. Currently, about 10% of Bharti’s revenues come from value-added services (VAS). This figure is likely to increase to about 15% following the introduction of a slew of new data services following the introduction of 3G services. Operators are currently unable to launch 3G services as the radio frequency for these services are occupied by the country’s defence forces. This comes as the project to get the defence ministry to release 45 Mhz of spectrum (20 MHz for 2G and 25 MHz for 3G) is long overdue. As per the initial plan, the release was due in the second half of 2006, which was later extended to March 2007 and then to July 2007. With the department of telecom (DoT) and the defence ministry locking horns over the release of spectrum, the launch of 3G services is set to be further delayed.
Shapes of things to come - Vodafone & Bharti enter into deal to share backhaul
Vodafone CEO Arun Sarin, in his webcast address on Monday said that infrastructure sharing would enable the UK-based major to save over $1 billion over the next 5 years and also contribute to an addition of 1.5% to its EBITDA margins. In its deal with Bharti, Vodafone has suggested sharing of infrastructure with Bharti. With Bharti and Vodafone having taken the concept of infrastructure sharing to the next level, all eyes are now on the Telecom Regulatory Authority of India. This is because Indian telecom companies are not allowed to share active infrastructure such as optic and feeder fibre cables, radio links, network elements, backhaul, antenna and transmission equipment. At present, Indian telecom companies are permitted to share only passive infrastructure such as towers, repeaters, shelters and generators. But Trai in its upcoming recommendations is likely to suggest that these norms be relaxed.
This concept can translate into big capex and opex savings only if telecom companies are allowed to share both active and passive infrastructure. Trai as well operators feel an extended version of the concept, where radio access networks of operators are shared, can lead to better utilisation of network resources as well as offer increased intra-circle roaming. While passive sharing enables telecom companies to share over 30% in both capex and opex spendings, service providers said that this figure could touch 50% if active infrastructure sharing is allowed.
Active infrastructure sharing will enable operators to provide mobile services to their subscribers wherever their own network signal is not available and help them increase their coverage area and quality of service (QoS) with almost no additional expenditure. Sources also said Trai is examining whether license condition needs to be modified to permit resale of point-to-point bandwidth for limited purpose of backhaul sharing.
Put simply, the savings will not be so significant and Bharti Airtel and Vodafone be able to roll-out joint networks in virgin areas if active infrastructure cannot be shared by operators. Little wonder that Bharti in its communication to Trai on this issue has pointed out that "while, existing license conditions allow passive infrastructure sharing among service providers, however, it has not helped actually translating it into infrastructure sharing to the desirable extent.
THE HUTCH DEAL - WHAT'S THE VODAFONE OFFER
THE COMPANY - Hutch Essar currently has some 23.3 million customers at 31 December 2006, representing a 16.4% national market share. Hutch Essar operates in 16 circles and has licences in an additional six circles. Up until January 2006, Hutch Essar had licences in 13 circles, of which nine have 900 MHz spectrum. In January 2006, Hutch Essar acquired BPL, thereby adding three circles, each operating with 900 MHz spectrum. In October 2006, Hutch Essar acquired Spacetel, adding six further licences, with operations planned to be launched during 2007.
THE DEAL - Vodafone is paying US$11.1 billion for a 67% interest in Hutch Essar, and will assume net debt of approximately US$2.0 billion. The transaction implies an enterprise value of US$18.8 billion for Hutch Essar. HTIL's existing partners, who between them hold a 15% interest in Hutch Essar, have agreed to retain their holdings and become partners with Vodafone. Vodafone's interest will be 52% following completion and Vodafone will exercise full operational control over the business. If Essar decides to accept Vodafone's offer, these local minority partners between them will increase their combined interest in Hutch Essar to 26%.
WHY ? - Constant pressure on Vodafone to enter emerging markets . In the context of a population penetration that is expected to exceed 40% by FY2012, Vodafone is targeting a 20-25% market share in India within the same timeframe. According to Vodafone, India is the fastest growing mobile market in the world, with around 6.5 million new subscribers every month.
BHARTI TO GAIN BY - Vodafone announced that it has signed a memorandum of understanding with Bharti Airtel on infrastructure sharing and that it has granted an option to a Bharti group company to buy its 5.6% direct interest in Bharti.
Whilst Hutch Essar and Bharti will continue to compete independently, Vodafone and Bharti have entered into a MOU relating to a comprehensive range of infrastructure sharing options in India between Hutch Essar and Bharti. Vodafone granted Bharti an option, subject to completion of the Hutch Essar acquisition, to buy its 5.6% listed direct interest in Bharti for US$1.6 billion which compares with the acquisition price of US$0.8 billion.
The Essar Group - currently holds a 33% interest in Hutch Essar and Vodafone will make an offer to buy this stake at the equivalent price per share it has agreed with Hutchison Telecom International.
Vodafone made no comment about whether the network would drop the Hutch branding, and become a Vodafone brand operator in India. The MOU outlines a process for achieving a more extensive level of site sharing and covers both new and existing sites. Around one third of Hutch Essar's current sites are already shared with other Indian mobile operators and Vodafone is planning that around two thirds of total sites will be shared in the longer term.
The plans for future - As part of the operational plan, Vodafone expects to increase capital investment, particularly in the first two to three years, with capex as a percentage of revenues reducing to the low teens by FY2012. The operational plan results in an FY2007-12 EBITDA CAGR percentage around the mid-30s. Cash tax rates of 11-14% for FY2008-12 are expected due to various tax incentives and will trend towards approximately 30-34% in the long term. As a result of this operational plan, the transaction meets Vodafone's stated financial investment criteria, with a ROIC exceeding the local risk adjusted cost of capital in the fifth year and an IRR of around 14%.
THE DEAL - Vodafone is paying US$11.1 billion for a 67% interest in Hutch Essar, and will assume net debt of approximately US$2.0 billion. The transaction implies an enterprise value of US$18.8 billion for Hutch Essar. HTIL's existing partners, who between them hold a 15% interest in Hutch Essar, have agreed to retain their holdings and become partners with Vodafone. Vodafone's interest will be 52% following completion and Vodafone will exercise full operational control over the business. If Essar decides to accept Vodafone's offer, these local minority partners between them will increase their combined interest in Hutch Essar to 26%.
WHY ? - Constant pressure on Vodafone to enter emerging markets . In the context of a population penetration that is expected to exceed 40% by FY2012, Vodafone is targeting a 20-25% market share in India within the same timeframe. According to Vodafone, India is the fastest growing mobile market in the world, with around 6.5 million new subscribers every month.
BHARTI TO GAIN BY - Vodafone announced that it has signed a memorandum of understanding with Bharti Airtel on infrastructure sharing and that it has granted an option to a Bharti group company to buy its 5.6% direct interest in Bharti.
Whilst Hutch Essar and Bharti will continue to compete independently, Vodafone and Bharti have entered into a MOU relating to a comprehensive range of infrastructure sharing options in India between Hutch Essar and Bharti. Vodafone granted Bharti an option, subject to completion of the Hutch Essar acquisition, to buy its 5.6% listed direct interest in Bharti for US$1.6 billion which compares with the acquisition price of US$0.8 billion.
The Essar Group - currently holds a 33% interest in Hutch Essar and Vodafone will make an offer to buy this stake at the equivalent price per share it has agreed with Hutchison Telecom International.
Vodafone made no comment about whether the network would drop the Hutch branding, and become a Vodafone brand operator in India. The MOU outlines a process for achieving a more extensive level of site sharing and covers both new and existing sites. Around one third of Hutch Essar's current sites are already shared with other Indian mobile operators and Vodafone is planning that around two thirds of total sites will be shared in the longer term.
The plans for future - As part of the operational plan, Vodafone expects to increase capital investment, particularly in the first two to three years, with capex as a percentage of revenues reducing to the low teens by FY2012. The operational plan results in an FY2007-12 EBITDA CAGR percentage around the mid-30s. Cash tax rates of 11-14% for FY2008-12 are expected due to various tax incentives and will trend towards approximately 30-34% in the long term. As a result of this operational plan, the transaction meets Vodafone's stated financial investment criteria, with a ROIC exceeding the local risk adjusted cost of capital in the fifth year and an IRR of around 14%.
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