Bharti Airtel – basic analysis
04 Mar 2010
if you’re keen watcher of stock, you might have noticed, bharti airtel is still digging deep down, it is a confusing stock in recent time, unable to decide either to hold or sell it off. i did a basic study on the stock and here is the result of study i did on the stock.
before we go further, the reason airtel stocks going down is, it tried to acquire few foreign telecom companies, last year it tried to acquire MTN a african telecom company, this didnt succeed, now they are seeing zain africa a kuwaiti company, deal is still in talks and zain asking price is $10.7 billion.
emotionally speaking, a indian company expanding overseas, is good and it requires our support, but we cant blindly support some unrealistic dreams of the companies, and loose the money, but sunil mittal’s dream isnt unachievable. very much realistic, just huge.
who is zain?
zain is the only telecom company in africa which operates in several countries there, it is holding 50 – 70% of market, with about 4 crore subscribers, zain is asking about 255USD for each subscribers to airtel.
why airtel need zain?
airtel is the top player in india, now it is ambitious to expand outside india, it has penetrated sri lanka and bangladesh already and want to enter africa, african market is very green, has potential to grow with more subscribers, initially airtel tried to enter africa by acquiring MTN, but the deal got failed, now they are trying the same by acquiring zain, if they succeed they will be the third largest telecom company in middle east.
financial:
zain’s price tag is 10.7 billion USD, airtel need 9 billion USD from banks within and outside india, airtel can fetch upto 2-3 billion USD, airtel want that loan at 7% interest rate, airtel also in talks with banks on this.
lets talk problems:
- will airtel get loan at this low interest rate?
- zain is also operating in many african countries which doesnt have political stability, aill airtel capable enough to deal with it
- analysis by experts say, it will take 5 – 8 years for airtel to come back to normal.
good stock?
- airtel already operating in srilanka and bangladesh apart from india.
- airtel has plans to expand to 15 more countries
- africa has lowest cell subscribers, has potential to grow in years to come.
in my personal opinion very good stock for long term.