Zain Q4 net profit rises (Kuwait)
Kuwait’s Mobile Telecommunications Co. Zain stated that its 2010 net profit rose as the company added new subscribers and that it plans to double its net profit by 2014.
The subject of a nearly $12 billion takeover offer by U.A.E.’s biggest telecoms company Emirates Telecommunications Corp., Etisalat, said its net profit excluding a capital gain from selling its African assets rose to US$1.02 billion, compared with US$700.80 million a year earlier.
Net profit reached US$3.80 billion, including a capital gain of US$2.76 billion from the sale of Zain Africa assets on June 8, 2010.
According to Zain Group Chief Executive, Nabeel Bin Salamah, the company targets organic growth and more than doubling its net profit by 2014. To realize their business aspirations, they have devised an integrated strategy that will hopefully aid them, through organic growth, to reach 52 million customers, generate 6.3 billion in revenues, and increase earnings before interest taxes, depreciation and amortization to $3.4 billion– while improving the EBITDA margin to 53%-and more than double their net profit to $2.1 billion by 2014.
Zain stated that 2010 revenue reached US$5.03 billion, 7% increase from the year earlier. Zain added that its mobile customers stood at 37 million at the end of December, an increase of 23% from the same period a year earlier.
Zambian Stock Exchange seeks to block delisting of Airtel subsidiary
Bharti Airtel in a bid to delist its Zambian subsidiary from the local stock exchange have hit another road-block after the Lusaka Stock Exchange (LuSE) stated that the decision could affect the development of the local capital market.
Around 2,000 local shareholders rejected the mandatory offer that Bharti Airtel made after it secured 97% of the company in open purchases.
According to sources, it’s not automatic that when you make an application to delist it is accepted immediately. You have to satisfy the provisions of the listing rules and also the companies Act and, that is what we are looking at now. There is a lot going on at the level of stock market but it’s not automatic that when you reach more than 90%, then you have to delist.
Trading in Zain Zambia’s shares was suspended on August 2010 after Bharti Airtel bought Zain’s African assets.
The company was listed on the stock exchange in June 2008 when it was still known as Celtel. It was only the 19th company to be listed on the local stock exchange at the time.
Bharti to award vendor contracts in Africa
Bharti Airtel is reportedly set to award contracts to build-out its new African networks to the same three vendors it has appointed to rollout its 3G network in India: Ericsson, Nokia Siemens Networks (NSN) and Huawei.
According to reports citing comments from an unnamed executive close to the deal, the contracts will last for five years and will be worth upwards of US$3 billion. Bharti currently has a little over 40 million customers in Africa across 16 markets following its acquisition of Zain Africa earlier this year. But it is looking to grow its African customer base to 100 million by 2012 by expanding its networks and services. Sources claims that the network contracts will see a significant number of Bharti’s employees in Africa move to the payrolls of the three vendors.
As per the report, this will be the third outsourcing contract that Bharti has awarded in Africa since acquiring the assets. Last month, Bharti announced that it was awarding its call centre contracts for its African operations to IBM, Tech Mahindra and Spanco, while in September it awarded a US$1.5 billion contract to IBM to manage its IT needs across the 16 markets.
The outsourcing model has been pioneered by Bharti in India, which has allowed it to operate a low-cost, high-volume business model and it is hoping to replicate this in Africa. Bharti’s African businesses accounted for 25.6% of total revenue and 21% of mobile subscribers in its latest financial quarter.
Bharti to close Zain Africa deal soon
www.WirelessFederation.com/news: Bharti- Zain deal is expected to be closed soon by both Bharti Airtel and Zain Africa to acquire latter’s African business. Meanwhile, Bharti Airtel is in the process for getting approvals for its acquisition.
Bharti Airtel signed a deal with Kuwait-based Zain Telecom in March to buy its African business for $10.7 billion, consummation of which will transform Bharti into a truly global telecom company with operations across 18 countries.
The deal will also make Sunil Mittal-led Bharti the world’s seventh largest mobile operator with a total subscriber base of about 179 million with an estimated revenues of $13 billion. Zain on the other hand has operations in 17 African countries and Bharti has acquired all, excluding Sudan and Morocco.
Q1 2010 – Zain revenue up 11% & subscribers up 28%.
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Total Managed Active Customers
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31.4 million up 28% on Q1, 2009
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Consolidated Revenues
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KWD 329.7 million (US$1.146 billion)
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EBITDA
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KWD 139.2 million (US$ 483.7 million)
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EBIT
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KWD 99.4 million (US$ 345.6 million)
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Net Income
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KWD 51.5 million (US$ 179.1 million)
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EPS
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KWD 0.013 (US$ 0.05)
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Bharti- Zain Africa deal faces fresh hurdle
www.WirelessFederation.com/news: A fresh hurdle in the Bharti Airtel and Zain Africa deal has emerged after the change in ownership at the country’s dominant telecommunications provider has been branded as a violation of the law of our country†by government of the Republic of Congo. The Congolese government denied of any information about the proposed transfer of the license under which Zain operates.
According to Thierry Moungalla, telecoms minister in the central African oil-producer, the government cannot conceive that a buyer or a seller could at no point of the process inform the authority that had granted the license and this clearly reflects the violation of the law of the country. By breaching the law, the operator may be fined or have its license suspended and, as a last resort, terminated. However, the action of the government has still not been revealed.
The Indian group is poised to become the world’s fifth-biggest mobile carrier after it signed the deal, which placed an enterprise value of $10.7bn on the assets, two weeks ago.
Bharti includes low cost model in its strategy for Africa
www.WirelessFederation.com/news: Indian telcos have made a mark for offering low cost service and Bharti Airtel is ready to enter the African market with its trademark expertise after acquiring Zain African assets. The aim of the company is to reduce costs with the motto to earn high profits by offering ultra low cost service.
The low cost model is expected to be applied in all the 15 markets with a local flavor to emerge successful. Maximizing the consumption of minutes, which has been successful strategy of Bharti in India, is also on its cards for Africa. This can be achieved by two ways- either by increasing usage per subscriber by way offering lower tariffs or by raising subscriber per base transceiver station.
CAPEX investment will have to be included in the strategy formulated by Bharti involving cost reduction and increased usage besides building a strong network to compete with other players on the continent involving an investment of around $1.5 billion. Bharti strategy might also encounter some problems from the higher taxes and mobile termination rates.
Bharti to use brand name to build on Zain Africa acquisition
www.WirelessFederation.com/news: Besides focusing on the reduction of costs, Bharti is also planning to use its endearing brand to build on its acquisition of Zain Telecom’s African operations. As a result of $10.7 billion acquisition, Zain will be replaced by Bharti Airtel to become the brand of the combined entity in each of the 15 countries in Africa.
According to Manoj Kohli, who will head Bharti’s African operations, Bharti Airtel has been the number one endearing brand in India and its objective is to repeat the same positioning in the African states, too so the Airtel brand will be the key to its business success in these countries it will be positioned as a global brand. However, in its implementation, Airtel will use a lot of vernacular language, looking at local needs.
Procurement, information technology network, call centers, and data centers have been described as some of the key areas of synergy and the organizational structure of the company will include employees of Zain, expatriates from Bharti and new recruits into the international team.
The shares of Bharti Airtel closed at Rs 312 per share, rising 0.35 per cent. Recovery in the shares has been noticed after the Zain Bharti deal was declared for the first time reflecting that not only there is positive response towards the Zain- Bharti deal; the market is also doing well.
Bharti Airtel hails $10.7-billion deal with Zain Africa
www.WirelessFederation.com/news: The cat is out of the bag. The most talked about deal of the season has been consummated. And India is truly established as the first post-Independence multinational. The highly developed telecom sector of India has now come to the forefront of the world business model.
By signing the final $10.7-billion deal with Zain Africa for all its African assets, Bharti Airtel has finally got the big ticket global acquisition. According to Bharti Airtel CEO, Sunil Bharti Mittal, as soon as the regulatory approvals fall in place, $8.3 billion will get transferred and the remaining $700 million will be transferred after one year.
It has also been revealed by Sunil Mittal that Airtel will rebrand Zain in Africa within months of closing the deal. The company made it clear that there is no need of strategy for the turnaround for Zain. The company has been really doing well occupying the top slot in 10 countries, second in four countries and fourth in just one country i.e. Ghana. Besides, the company has $4 billion of top line and $1.2-billion EBIDTA.
Zain has also been making investments year on year and has invested $600-700 million and even $800 million in capex at times.
Manoj Kohli who has been heading the international operations outside South Asia will take the charge of the new operations in Africa as CEO. Operations of the firm will be led by the Africans and supported by key members of the Indian team who will move from India to Africa.
On the failure of the deal with the Africa’s top mobile operator MTN, Sunil Bharti opined that the deal with Zain is a bigger one as it provides Bharti Airtel to have its own brand, its own management, its own low-cost model and its outsourcing model. If the deal with MTN would have materialized, the company would have only got participation rights and co-management rights in the company.
