Bharti Eyes 7 Billion Dollar Foreign Loan For Zain (25-Feb-2010)
In order to acquire the stake in Zain - the African cellular company, Bharti Airtel is in talks with banks to fund the $7 bn offshore loan. However, the total offer would be around $9 bn to buy the stake in the African Company.
The remaining amount would be generated from the rupee market, but the currency mix is yet to be finalised.
Mr. O P Bhatt, Chairman of State Bank of India (SBI) said that Bharti had shown an interest in obtaining funding from SBI for the Zain assets deal and was in talks with SBI.
In August 2009, the Bharti had approached SBI for dollar and rupee loans totaling about $2 bn for the deal with South Africa''s MTN but unfortunately it was aborted.
Both the company''s are in exclusive talks until 25th of March for the proposed deal, which would give Bharti access in 15 African countries with about 42 mn subscribers.
By Friday, Bharti may finalise its financing details in what could be the largest acquisition loan for an Indian borrower.
Bharti Airtel has prepared the blueprint for Zain''s operations and it goes like this - Bharti will replicate its now-famous minute factory model combined with a low-cost structure. It will work on infrastructure sharing and look to forge contracts on a network utilisation-based model, much like it does in India. This will improve productivity at Zain''s Africa operations.
Bharti Airtel is currently trading flat at Rs.276 at 3.23 PM.
The stock hit an intraday high of Rs.279.7 till now, as against the 52-week high of Rs.495.The stock hit a low of Rs.271.95 during the day. The stock had hit a 52-week low of Rs.229.5 on November 27, 20098.
The stock opens at Rs.271.95 at BSE. The total traded volume of the scrip on BSE till now stood at 701215.
Meanwhile today, the BSE Sensex is trading up by 3.62 points, or 0.02% , at 16259.59 on 3:23 PM.
Meanwhile today, the NSE Nifty is trading up by 0.60 points, or 0.01% , at 4859.2.
Bharti Airtel has an equity capital of Rs 1,898.63 crore as of 2009 Dec. The face value per share is Rs 5. At the current price of Rs 276, the P/E multiple stood at 13.5414112685725 with book Value of 72.49 and P/BV at 3.81.
The total shareholding pattern of the company as on Dec 2009 stood at Promoters- 67.84%, Institutional Investors- 25.45%, General Public- 2.11% and other investors- 4.60%.
Considering the current price of Rs. 276 at 3:23:00 PM , the stock had underperformed the market over the past one month till 25/02/2010 declined -14.22% as compared to the Sensex''s return of -0.19% and NSE Nifty''s -0.19 % returns.
Considering the current price of Rs. 276 at 3:23:00 PM , the stock had underperformed the market over the past one quarter till 25/02/2010 fell -7.91% as compared to the Sensex''s return of -3.94% and NSE Nifty''s -3.94 % returns.
Last week, in a meeting with HSBC Securities and Capital Markets, the Bharti management stressed on exploring usage elasticity and low penetration of around 36 % across Zain''s Africa operations as the key focus areas.
Average minutes of usage (MOU) per subscriber (for Zain) are estimated at around 110, which is one-third of Indian MOUs, and therefore there is a potential for exploring the usage elasticity and replicating the minute factory model.
Regarding the financial performance, for Q-3 ended 31st December 2009, the company reported decline of 0.85% in its net sales to Rs 8755.45 crores as compared to Rs 8830.11 crores of corresponding period of previous year. Further, net profit of the company rose 14.61% to Rs. 2312.10 crores for quarter ended December 2009.
Bharti Airtel, formerly known as Bharti Tele-Ventures LTD (BTVL) is India''s largest cellular service provider with more than 110 million subscribers as of Sep 2009. With this, Bharti is now the world''s third-largest, single-country mobile operator and sixth-largest integrated telecom operator. It also offers fixed line services and broadband services.
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