Why Bharti isn’t acquiring abroad

Posted on | May 17, 2006 |

Sunit Mittal shares the problems faced by Bharti in its attempts to go global. He says the valuations of operators worldwide have been driven to crazy heights by the Chinese and Middle-East investors.

Asset prices are being driven by the Chinese, who have the go-ahead from their government to go and acquire, and Middle East investors, who have plenty of cash with current oil prices.

Last year (in May), we did bid for Celltel, which is present in about 17 African states. Our bid was at $2 billion but STT (Singapore Technologies Telemedia) bid $2.45 billion and MTC (Mobile Telecommunications Co., Kuwait) even higher at $3.45 billion. We did not even participate in the just-closed bidding for Millicom International Cellular. The bids were just astronomical: China Mobile’s bid was at $5.5 billion beating UAE-based Investcom’s $5billion.

Bharti’s strategy is not to acquire but to grow organically by bidding for licenses in international markets.

We don’t intend to move into the international market in a major way at this point of time. Not that we did not try but there’s total madness in telecom valuations…

There’s no way we would bid such astronomically high prices. We have to move cautiously; we don’t have that kind of cash lying around. But we will keep looking for licences and pick them up if they fit in our scheme of things.

On outsourcing telecom infrastructure and IT:

In the first 11 years of our business we’d set up a total 10,000 base stations. Last year alone we installed 10,000 and this year we will put up 20,000. There’s no way we’d have done this on our own. IBM today has 2,000 people on its rolls running the IT department for us; that’s a large load that’d have otherwise befallen us. Costs are marginally up, but there are no more fires to be put out in quality. Call drops earlier used to be 2-2.5%, now it is 1%. Networks outages have come down.

Source: Financial Express

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