7/28/2019 30802977 Bharti Zain Deal

1/7

Group-7

SWOT Analysis ofBharti Airtel-Zain

Deal

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Strength

Largest Telecom Player In India

Strong Financials

Strategic Alliance with other stake holders,including Nokia, SingTel & Sony Ericson

Pan-India Presence

EPS is accretive, total subscriber base of 140million in INDIA.

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Strength

ARPU in Africa ranges from $3 to $10, whichcompares favourably with India, where AirtelARPU is $5(Rs 230)

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4/7

Weakness

Outsourcing of core systems

Integration pain likely to remain for about 12 to18 months

The African assets of Zain reported a loss of $35million in 2008

In the first months of 2009,it has seen a 17 %drop in net profit.

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Weakness

According to Zains Q3 presentation, 47% to50% of all revenue comes from non-Africansources.

Bharti paying a 55 % premium for zain Ebitta, incomparison with Bhartis own valuation.

Nigeria is not profitable and reported a loss of$88mn on revenue of $986 mn, as of sept ,09

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Opportunities

Tie ups for the customer application

Strong presence in the emerging markets.

Match box Strategy scale of Penetration.

Current tele density of 30.6% in Africa is stilllow considering other developing countries and

opportunity of a new brand to bring a market.

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Threats

o Intense competition & shortage of bandwidth

oFalling ARPU

oFor a set of assets that are not positive at thispoint, analysts maintain that Bharti have toabsorb it from its profitable India operations..