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Bharti signals renewed international push

Bharti signals renewed international push
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First Published: Wed, Jan 13 2010. 04 06 PM IST
Updated: Wed, Jan 13 2010. 04 06 PM IST
New Delhi: Leading Indian telecom Bharti Airtel on Wednesday set up a new unit to drive its foreign expansion, signalling its growth ambitions are intact despite twice failing to reach a deal with South Africa’s MTN.
A day after agreeing to buy control of Bangladesh’s Warid Telecom, Bharti said CEO Manoj Kohli would head the new international business group that would focus on expansion in emerging markets beyond South Asia.
“Bangladesh was the first step forward, and by making Manoj the head of international business, they are giving a clear signal that more acquisitions are on the cards,” said R.K. Gupta, managing director at Taurus Asset Management.
“The Indian market is kind of heading towards saturation and potential growth is becoming limited, and Bharti must have to look at lesser developed markets where penetration is low,” said Gupta, whose fund manages about $420 million and owns Bharti shares.
Deputy CEO Sanjay Kapoor will become the CEO for India and South Asia when the changes take effect on 1 April.
Bharti has been looking for acquisitions in emerging markets where it can replicate its low-price, high-volume model.
It held tie-up talks with MTN in 2008 and 2009 that would have catapulted it to top 10 of global telecoms, but could not seal a deal.
Shares in Bharti Airtel, India’s seventh-most valuable listed company with a market capitalisation of about $27 billion, fell 1.1 percent in a Mumbai market that rose 0.5%.
The company, owned more than 30% by SingTel, South East Asia’s top phone firm, is scheduled to announce its December quarter results on 22 January.
Bankers and analysts have said Africa and the Middle East loom as the most likely destinations for Bharti, with Kuwait’s Zain and Sweden-based emerging market operator Millicom International possible targets.
Bharti Airtel director Akhil Gupta said in October they would look at Zain if there was an opportunity.
Plans for a $13.7 billion sale of a controlling stake in Zain to a consortium of Asian investors have been delayed, and analysts have doubts the deal would go through.
Bharti, which also has mobile operations in Sri Lanka, is looking further afield as its home turf becomes increasingly crowded.
Chairman Sunil Mittal said the Indian market was experiencing hyper-competition, and Bharti would develop comprehensive plans for emerging markets beyond South Asia.
Bharti’s 119 million mobile users in India account for about 23% of the world’s fastest-growing mobile market, but profit margins have taken a hit in recent months as operators engage in a vicious price war.
Norway’s Telenor launched Indian operations in December and has signed up 1.2 million users, while sixth-ranked Tata Teleservices, part owned by Japan’s NTT DoCoMo, has outpaced Bharti in monthly subscriber additions in recent months.
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First Published: Wed, Jan 13 2010. 04 06 PM IST
More Topics: Bharti | Airtel | Telecom | SingTel | Foreign Expansion |