Bharti – Zain Deal Details When Bharti`s price tanked over 9 per cent, when Zain`s stock went up 9 per cent in trade. no deal has been finalised yet. Bharti has just begun exclusive talks with Zain Telecom to acquire its African operations, barring Morocco and Sudan. Zain Africa will not be Bharti’s first international acquisition.

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….