The management of Bharti airtel hosted a conference call to update on the completion of Zain Wireless takeover in Africa. Excerpts from the call is as follows.
Management expects growth to be driven primarily by increasing 1) Penetration 2) Usage and 3) Data revenues. Market opportunity is huge, backed by confluence of higher youth population and high growth in GDP (>5% p.a.)
Tele‐density is ~20% with some countries as low as 10‐12%. MoU at 50‐60 minutes vs. global average of ~300 minutes and Indian average of ~450 minutes. Hence, this would give Bharti significant headroom to implement its low‐cost high usage model.
Brand launch in 15 countries is expected in Oct 2010 but before that, Bharti will look to improve the quality of their network, products as well as service/ distribution.
Tenure of the licences is 15‐20 yrs; no renewal in next 3 years. Average spectrum is 20 MHz for 2G and 10 MHz for 3G, leaving little room for new operators to enter the market.
Capex of ~USD 800 mn is expected in Africa for FY11, lower than the earlier expectation of USD 1 bn Debt for Zain acquisition raised with tenure of 6 yrs with the first principal payment due 2.5 yrs post‐drawdown. The cost of debt is LIBOR+195 bp resulting in USD 200 mn annual interest cost to be serviced by the African operations [Only industrialists get such dirt cheap money]
