Last month it established its presence in Bangladesh by acquiring 70 per cent stake in Warid Telecom. Zain has a presence in 15 African countries, out of which nine countries have mobile penetration below 40 per cent. Also, Zain is the market leader in 10 of the 15 countries it operates in. Bharti is valuing Zain’s African operation more than its own operation.high potential growth in Africa justifies high valuation for assets.

There are just 5-6 players in markets where Zain operates, while the number of players in each circle in India is roughly twice this number. Zain faces less pressure on its margins than Bharti. combined entity would benefit from the larger scale of operations. For example, Bharti purchases telecom equipment at rates 30-40 per cent lower than Zain, and the merger would allow Zain to benefit from the size and efficiency of Bharti. over the long term, as the African operation returns to profit, interest burden would decrease. It is not uncommon that the acquirer`s share price falls after a deal announcement as market participants fear that value created from the deal will not be as large as the purchase price.

Moreover, Bharti remains strong on the domestic front. Its non-mobile businesses—telemedia and enterprise services—contribute around 35 per cent of its operating profit and are on a strong footing. Guys learn to identify the oppourtunity and exploit the max out of it.

Don`t go in for false trader calls by analysts to drive their notion. Be sane and use your own brain before you decide to sell any stock. Value the power of the company and it can do good to your wallet….

Bharti Airtel goes in for another acquisition with Zain Group
Bharti Airtel has made another attempt to enter the African market. It has announced an acquisition of Zain group’s 15 African assets (except Sudan and Morocco assets) for $10.7 billion. It is in exclusive talks with the Zain management till March 25 2010 . The deal is expected to be all cash and Bharti has to pay $10 billion till April 2010. Zain’s African operations have a subscriber base slightly higher than 41 million.

Stock Name
Stock
Code
RCP*
(Rs.)
Target
Price (Rs.)
Potential
Upside
Rating

Bharti Airtel

BHATE

285/-
388/-
36%

Strong Buy

* Recommended Price

What do the above ratings imply?

Strong Buy : Expected return of 20% or more
Buy : Expected return of 10% to 20%

Add : Expected return up to 10%
Reduce : Expected return up to -10%

Sell : Expected return of -10% or more

Example: Raj has two stocks A & B. Stock A is recommended as an Strong Buy and stock B as an Sell. In this case, Raj may want to exit B since, it is likely to Sell and invest his money in stock A for better returns.

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