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Updated: Bharti Airtel To Buy 70% Stake In Warid Telecom; The Bangladesh Telecom Market

airtelwaridUpdate: Bangladesh’s telecom regulator today approved Bharti Airtel’s plan to acquire 70 percent stake in telecom operator Warid Telecom.  Reuters reports Airtel will invest an initial amount of $300 million for expanding Warid’s network in Bangladesh. We are awaiting an official response from the company. Strangely enough, Airtel is still maintaining silence on the bid: “We have no comments to offer beyond our initial statement.”

For details of the Bangladesh Telecom market, and how Warid is placed, read on.

Earlier Story (Dec 16): After its failed attempt at merging with South African operator MTN, India’s largest cellular operator Bharti Airtel is scouting for international acquisitions. The Daily Star reports that Airtel has sought the approval of the Bangladesh Telecommunication Regulatory Commission (BTRC) to pick up 70 percent stake in Warid Telecom, owned by the Abu Dhabi group.

The report quotes unnamed Warid executives who have valued the deal at $900 Million. Post signing the deal, Airtel also plans to invest an initial $300 million in the company. Warid is one of six operators in Bangladesh, a country with 51.4 million mobile subscribers as of October 2009. An auction of 3G spectrum in Bangladesh is scheduled for 2010.

Note that Bharti has neither confirmed nor denied plans to buy Warid. When contacted, a Bharti spokesperson told MediaNama, “We keep evaluating international expansion opportunities from time to time. However, at this point, we do not have anything definite to share.”

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The Wall Street Journal reports that Akhil Gupta, deputy group CEO and MD at Bharti Enterprises, said that “We have been interested in Bangladesh because we have an interest in countries in the SAARC (South Asian Association for Regional Cooperation) region.”

Airtel had 113 million subscribers in India as of October 2009 and competes with ten other operators here. It launched its Sri Lankan operations in January 2009 and has been on the look out to expand to other international markets through the inorganic route.

An overview of Warid Telecom, and its competition in Bangladesh:

Warid Telecom & Deals

— Singtel Deal In Pakistan: Warid also operates a GSM Network in Pakistan, and SingTel had bought 30 percent stake in that entity for $758 million in July 2007. Warid had 18.5 million mobile subscribers in Pakistan as of September 2009.

— Warids Essar Deal In Africa: The Dhabi group recently sold its African assets of Warid in Congo-Brazzaville and Uganda to India’s Essar group. Essar Group holds 33 stake in Airtel’s rival Vodafone Essar, which is the #3 Indian telco with 85 million subscribers as of October 2009. Essar already had a presence in Africa and was seeking to expand there given the continent’s telecom market is still emerging and has a vast potential as a result of low teledensity. More on the African telecom market here.

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Warid In Bangladesh

Warid is the fourth largest cellular operator of six in Bangladesh (a list here). The teledensity in the country is at 33%. Warid received its GSM licence in 2005 and rolled out in January 2007 to providing cellular services and it also holds an ISP licence. Warid also owns a next generation network and license, but has not launched due to lack of spectrum availability.

Vodafone group, which owns the remaining 67 percent of Vodafone Essar, had approached Warid Telecom as did several international operators such as SingTel (which owns 31 percent stake in Airtel) and Etisalat (which bought over Swan Telecom in India) to form a partnership in Bangladesh.

Warid had 2.79 million customers in October 2009. It went through a tough time over the last year, when its market share fell from 8.5 percent in Q3-08 to under 5 percent in Q1-09 during which period it lost 2.23 million subscribers, but has shown signs of recovery since.

According to estimates made in an ITU report to the telecom regulator dated May 2009, Warid contributed an estimated 2,010,037,500 Taka ($29.2 million) to the the total industry revenues – one of the lowest at 1.9 percent.

The Bangladesh Market & Competition For Warid

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Bangladesh’s wireless sector suffered a slow down to below average growth but according to Market Watch, ARPUs have stopped decreasing and Minutes of Use per subscriber stabilized at industry average in the second quarter of 2009. Mobile teledensity only rose from 28% in 2008 to 30% in 2009, according to ReportLinker. The ITU report estimated Bangladesh telecom industry revenues at $1.57 billion:


— GrameenPhone: Telenor-owned GrameenPhone is the oldest and largest operator with 22.3 million connections in October and almost 43 percent market share. It launched a GP branded handset recently. Telenor owns 62% shares in GrameenPhone as of September 2009. Telenor also owns a majority stake in Indian telco Uninor, which recently launched in 7 circles in India. GrameenPhone is the highest contributor of revenues to the Bangladesh Telecom market, with 50.2 percent of all telecom revenues in the country at $789 million.

— Bangladesh Telecommunications Company (BTCL), the state owned wireline services accounts for 14.4 percent of telecom industry revenues, at $226.66 million. It doesn’t provide mobile services.

— Telekom Malaysia’s Axiata (Bangladesh) Limited is third with 10.99 million subscribers. Egypt-based Orascom Telecom acquired local operator Sheba Telecom in 2004 and renamed it Banglalink. Aktel’s contribution to revenues was 13.3 percent, at $209.082 million.

— Orascom Telecom Bangladesh Limited (brand name Banglalink) is the second largest with 12.27 million subscribers, and is estimated to contribute 12.3 percent to revenues at $192.689 million.

— The smallest is local operator Teletalk with 1.07 million customers. Teletalk contributes 4.7 percent to Bangladesh’s telecom industry revenues, at an estimated $74.1 million

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— SingTel invested CityCell (aka Pacific Bangladesh Telecom Limited) is the only CDMA operator with 1.98 million subscribers. SingTel owns 45 percent stake in CityCell. Citycell contributes 3.2 percent to the telecom industry revenues in Bangladesh, at $50.42 million.

Here’s an interesting report on Warid Telecom by a management intern who points out its weaknesses as being unable to capitalize and extend coverage to all districts and the organisation’s “Seth culture”.


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