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Updated: Airtel Acquires 70% In Warid Telecom; Warid Makeover?

Update: As we had anticipated (Warid Will Need A Makeover), Warid in Bangladesh will be rebranded as Airtel within four to six months, Financial Express reports. Speculation that a corporate reshuffling would result in job losses in the market is rife but the operator has denied it. Bangladesh could expect a  tariff war not dissimilar to what happened in India recently; Airtel sparked one in Sri Lanka by offering free SIM cards in Sri Lanka when it launched last year.

Earlier (Jan 12): India’s top mobile operator Bharti Airtel has now officially announced the acquisition of 70% stake in Warid Telecom, coinciding with the Bangladeshi Prime Minister Sheikh Hasina’s visit to India. Warid has around 2.9 million connections.

Airtel will buy out shares from owner Abu Dhabi group for an unquoted “nominal” sum and also from the issue of fresh shares at par. The Dhabi group will hold 30% stake and remain a strategic investor in Warid Bangladesh. The group recently sold its assets in Warid Africa to the Essar group.

While Airtel will have management and board control of Warid, the Dhabi group will place its nominees on the board. Airtel will invest an initial sum of $300 million to expand the operator’s network in Bangladesh, and has plans to invest $1 billion overall. Apart from India Airtel also has operations in Sri Lanka and Seychelles. Bharti Airtel Lanka Pvt Ltd was launched in January 2009, it claimed to have one million connections by June.

Bangladesh has a population of 160 million of which less than half are mobile (51.4 million mobile subscribers as of October 2009). Teledensity is at 32% so there is large potential for further coverage. Airtel’s Chairman and Managing Director, Sunil Bharti Mittal, has said that they’re looking to replicate the rural drive launched in India, and for Bangladesh’s teledensity to double in a few years. (Read: The Bangladesh Telecom Market)

Warid Will Need A Makeover

The operator that Airtel has acquired is a struggling one. Between Q3-08 and Q1-09, Warid experienced a drastic fall in market share from 8.5 percent to under 5 percent. It lost 2.23 million subscribers during the period, and contributed only 1.9 percent to Bangladesh’s telecom industry revenues in May 2009. Warid Telecom will need something of a makeover, in a market that is dominated by Telenor owned Grameen Phone.

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To achieve that makeover, Airtel could choose to rebrand Warid as Airtel Bangladesh, and make a fresh start. Domain names might be hard to come by, though: airtelbd.comairtel.com.bd have been booked, though airtel.net.bd is still available. The launch of 3G services might be another means of establishing differentiation: Warid will have to upgrade its networks in Bangladesh. Bangladesh is readying to auction 3G spectrum this year, and Airtel intends to participate, Airtel CEO & JMD Manoj Kohli told CNBC-TV18.

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