Bharti Airtel could be looking to shell out around $300-350 million to pick 70% stake in Warid Bangladesh, valuing the firm at around $500-550 million, according to back-of-the-envelope calculations by VCCircle.
A joint venture between Abu Dhabi Group and SingTel Group, Warid Telecom operates in Pakistan, Bangladesh, Uganda and Congo. But Bharti Airtel is interested only in the Bangladesh business of the company that was launched in May 2007.
Warid is one of the six mobile phone operators in Bangladesh besides Grameenphone, Banglalink, Aktel, Citycell and Teletalk. With 2.92 million subscribers by the end of November’09, Warid has 5.8% market shares in the country that has seen subscriber base move up from 9.3 million in December 2005 to 50.6 million at the end of November 2009.
Grameenphone Ltd, the only listed telecom operator in Bangladesh, has a market-cap of $3.6 billion giving it a valuation of $158 per subscriber.
As per last year’s deal (Sep 2008) in the sector, NTT DoCoMo paid $350 million to buy a 30% stake in Aktel, another Bangladeshi operator. At that time, Aktel had a subscriber base of 8.14 million which means it valued Aktel at about $145 per subscriber.
Warid could command a valuation closer or a little lower than Aktel as it is much smaller as also the fact that Grameenphone could be commanding a premium given its dominance in the market. In this case Warid could be valued around $420 million. Add to it a control premium of around $100 million, Bharti might have to shell out $300-350 million as a part of the deal.