Archive for the ‘India’ Category

Infosys ups full year forecast, points to US recovery

infosys logoIndian software & services giant Infosys has announced its results for Q2 2009 & has correspondingly raised its forecast for 2010 due to improved business from customers in the U.S.

Revenues for the period were $1.15Bn, down 5.1% on the same period in 2008 but a solid 2.9% increase on the first quarter. Infosys now anticipates revenues for this fiscal year to be $4.6 billion to $4.62 billion,  a  much more optimistic forecast than made in July.

Earlier this year, Infoysys (Nasdaq:INFY) had stated that it would look to retrench in it’s domestic market & Asia, as business conditions in Europe & the US continued to deterioate. So the upbeat quarter & CEO Kris Gopalakrishnan‘s bullishness have come as quite a surprise.

“In the second quarter, the overall business climate has improved. Clients are now looking to invest in a few strategic initiatives and relationships to maximize value from opportunities when the economic downturn ends”

Earnings for the ADS of the company are now expected to be in the region of $2.10, a 7% drop on 2008, however a much improved benchmark from July this year, when Infosys stated a potential overall decline in EPS by up to 12.5%.

Normally, companies that make U-turns on forecasts in the middle of the year tend to be broadcasting warning signals, however after a slew of negative messages, it is good to see Infosys are taking a positive track. Infosys is well known for being cautious on it’s financial announcements, so any bullishness from Gopalkrishnan, should be taken at face value. As more than 60% of Infosys revenues are generated in the US, could this be a signal that the recovery is actually starting ?

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AT&T eyes 25% stake in India’s BSNL as 3G comes to the fore

att-logo-orangeAccording to the Economic Times of India, domestic US telecom giant AT&T is in talks with state controlled Bharat Sanchar Nigam (BSNL) regarding placing an investment, that would see the company make a comeback in one of the fastest growing telecoms sectors. With mobile penetration advancing from 2% in 2005 to over 40% in 2009, still leaving plenty of room for growth.

AT&T (NYSE: T), which has been expanding its mobility business globally, quit the Indian mobile sector in 2005, selling its 33% stake in Idea Cellular following it’s merger with Cingular Wireless. It received around $250 million from the stake in Idea,that stake would now be valued at circa $3.5 billion. So a strategic mistake, that the New Jersey based company looks keen to repair. CEO Randall Stephenson spent much of 2008 in acquisition talks with Reliance, Idea and Aircel Cellular parent Maxis Communications, demonstrating a real desire to take a piece of the action.

BSNL has suffered from lackluster performance, as it’s monopoly has been slowly eroded over time, with new entrants carving up the market, especially in the mobile sector. The launch of 3G licences this year has seen heavyweight MNC telcos taking a greater stake in this huge growth market. Vodafone (UK) acquired Essar, Mobile TeleSystems (Russia) entered the market via Shyam Teleservices,  DoCoMo (Japan) has formed a joint venture with Tata Teleservices, whilst Telenor (Norway) has taken a passive route by acquiring shares in Unitech Wireless & SingTel (Singapore) has also invested heavily in Bharti Aircel, alongside Telia (Sweden) & BT (UK).

The Indian government reiterated plans to publicly list BSNL in July , although a firm time frame has not been committed to. Earlier that month, BSNL chairman Kuldeep Goyal said that the company was exploring a possible stake sale to a foreign firm to raise funds to help it compete better against its domestic rivals; however, he didn’t comment on how large the stake would be.

According to BSNL’s FY 2008 accounts, the value of the company is circa $17Bn. MTNL, the second of the telecom monopolies, which operates purely in Delhi & Mumbai, currently trades on the Bombay Stock Exchange  at Rs95 ($1.95) per share. BSNL would be expected to attain a much hirer premium, as it is the only current national carrier & market watchers have stated that post IP the company could be worth anything from $13Bn & $16.3Bn 65,000. Sources state that AT&T is interested in a 25% stake, so would need to buy in with $3Bn / $4Bn to make this work.

At present BSNL is the leader in all services in its license area, with over than 49 million mobile subscribers (17% market share), 35% fixed line subscribers (85% market share) & 2.5 million broadband subscribers.

I can see this coming off, as AT&T can offer extended network services & serious technical know how to BSNL, an area in which the company has lagged. AT&T India also operates a state of the art IP MPLS network across India that will also help the Indian company to expand it’s offerings into the burgeoning Enterprise market. With the Indian mobile market set to double by 2014, this would also give access to a potentially huge subscriber base of 100 million & dare I say it, a potential launch pad for iPhone.

For BSNL, this could be a great route to forestall the new & legacy players across the sub-continent, particularly in mobile & broadband, more importantly with infrastructure restrictions, LTE could play a defining role for any telecoms carrier in India.

Granted, this is all pure speculation at this point, however, if the rumoured talks firm up, I’ll be taking a long hard look at AT&T again.

Original post can be found at MyStockVoice.com

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MyStockVoice.com is now alive & kicking

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It’s taken a while & it’s been an interesting experience, but am pleased to say that we released MyStockVoice.com into public beta. For me personally, there have been a few challenges, “assisted” along the way by re-locating with my family from Switzerland to Slovakia.

The team at Connection Services who have designed & support the MSV platform have been excellent, especially when responding to an ever changing set of requirements. MyStockVoice started as this WordPress blog, where I could muse on my views on Emerging Markets & BRIC economies. A conversation with a friend who works in the City (London) encouraged me to look at doing something a little more. The original format, was a forum, then a newswire service & now it’s a fully fledged blog publication platform. So you can imagine how happy my colleagues at CSL were, when I tripped back every few months & said “right, this is what we are doing now”

Our aim at MSV is to provide an ever widening audience with value insights into what is rapidly becoming a major topic for hedge funds, investment managers & retail investors alike : BRIC & Emerging Markets. International stocks traded on US exchanges are becoming ever more popular, especially via Depositary Receipts (ADR,ADS,ADN) , for the more cautious or long minded, a number of ETF (Exchange Traded Funds) have sprung up to service the appetite to take part in these growing economies.

Covering all the major regions, MSV provides focussed channels into a variety of sectors & also specific categories for Macro Econmics, ADR & ETF investing. We are pleased to be working with some well established names from the investment community, along with faculties such as Knowledge at Wharton, the Economics Faculty at Beijing University, Skolkovo Business School in Moscow & Cranfiedl University in the UK.

Our strapline is “your community … your voice”  & to reflect this, we will be bringing our readers plenty of new unique content. Much of my time in the last two to three months has been spent contacting individual bloggers & also online media services that are based in the regions covered. In this way, we can present a “blend of thought”, that will allow our subscribers to formulate informed opinions on their own particular areas of interest.

So, enough jawing from me, but to close, Alex, Chris & myself would like to thank the team at CS & all the people that have had input into the project. We sincerely hope that you enjoy the MSV experience & are always open to new ideas, partnership opportunities & most of all feedback.

Many thanks

Paul

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Vodafone steps up to the plate, backed up by Emerging Markets

vodafoneLast week Vodafone Group (NYSE:VOD) released an interim management statement that considering the current economic climate, I consider to be pretty upbeat. I have been a long term holder of Vodafone stock on the London Stock Exchange & have over the last year traded the NYSE traded ADR up & down on swings. However with the current market, I am now looking for some growth & value plays. Looking a little closer at the report & doing some quick analysis of some of the major themes contained, I am now quite bullish on VOD going forward & will be picking up some shares for my investment portfolio. As of writing Vodafone was trading at £121.00 in London & $19.64 in New York.

Comment from : Vittorio Colao, Chief Executive

“In the first quarter the service revenue trend in Europe was consistent with the previous quarter and we continued to see good growth in India and South Africa. Our total communications strategy is delivering well, with organic data revenue up 19% and organic fixed line revenue 7% ahead of the comparative period. Free cash flow generation was strong at £1.9 billion, up 21%. The Group has reaffirmed its guidance for the full year.”

Highlights from the report :

  • Group: Revenue £10,743 million, up 9.3%
  • Group data revenue of £888 million, up 19.4% on an organic basis
  • Free cash flow of £1,896 million, up 21.2%; net debt at 30 June 2009 of £31.2 billion
  • Cost reduction programme on track
  • Proportionate mobile customer base of 315.3 million; 8.0 million net additions during the quarter
  • Europe: Service revenue up 4.4% driven by FX benefits. Data revenue up 17.8%. Fixed line revenue up 5.7%
  • Africa & CEE: Service revenue up 26.3% including Vodacom acquisition,Vodacom organic growth of 5.2% offset by weakness in CEE
  • Asia Pacific and Middle East: Service revenue up 21.8%
  • India service revenue growth of 23.0%

Interesting to see Vodafone making a point of mobile data revenues & 19.4% grwoth is a pretty impressive statistic. Much of this being driven out of Europe, where one of the big booms in mobile data is the popularity of 3G wireless broadband dongles (USB sticks) on “Unlimited” packages, which all the major operators have adopted. Vittorio Collao announced a major cost cutting initiative last November 2008, targetting cost reductions of $1.45Bn by  the end of the 2011 financial year in order to offset the pressures from inflation and the competitive environment and to enable investment in revenue growth opportunities. Savings of more than 65% of this target are expected to be generated by the end of the current financial year.

Vodafone has been at the forefront of network sharing, originally this started in the UK with Orange, now the group has signed a pan-European deal with Telefonica-O2, which will see network sharing being implemented in Germany, Ireland, UK & Spain. Analysts see this as a huge positive, as the deal is set for a ten year term & should save each company in the region of $350 million per annum. The growth figure of 8 million subscribers runs in line with analysts global forecasts for 2009 of circa 13%, as Vodafone is one of the higher value operators in each of its markets, the fact that it is expanding subscribers in a high churn market is positive.

“Old” Europe is the only area where Vodafone operates both fixed & mobile services, predominantly in the UK, Ireland, Spain, Potugal & Germany, where it is the second largest provider of broadband via its Arcor business unit. Having already discussed the cost savings initiative with Telefonica, the main story here is on how Vodafone are manbaging to reduce churn & promote ARPU via new services. Vodafone is far & away the leader in all of these markets regards business services (excepting Germany, which is dominated by T-Mobile), with consumer playing a strong supporting role, crucially the majority of these accounts are postpaid, which is reflected in higher service revenues than is the norm in this sector.

Another area that Vodafone is finally catching onto is the machine-to-machine market, or M2M. The company has made some recent investments in this sector & is set to benefit as the market grows from $4.2Bn in 2008, forecast to rise to $12.5Bn by 2012. It’s not all good upbeat news though, as recent EU intervention in roaming charges has had a detrimental effect on voice service revenues aceross the board. Retail termination costs have hit this part of the business very hard, with only Netherlands showing minimal growth of 0.6% mainly due to MVNO operations, whilst at the other end of the scale, Greece voice revenues sank by 15%.

In “new” Europe (CEE) & Africa, the atypical Emerging Markets,  we are presented with a mixed bag, however the region saw service reveues grow by 26.5%, mainly due to Vodacom (of which more later). Vodafone has seen serious competition in Romania, where no less than 6 operators are competing for one of the lowest ARPU generating populations in Europe, the situation not being helped by the extremely poor performance of the Lei versus the Euro. Similarly, Turkey has not been the shining star that Vodafone had expected when it launched their in 2005. However, now that 3G services are finally being launched, Collao today announced that the company would be investing up to $675 million in network infrastructure over the next 12 months, as Turkey has very low fixed line connections, mobile broadband is set to be a revenue enegine. I also have a feeling that as & when Turkey accedes to the EU, plenty of “rural” grant funding will be made available for the three network operators to provide near 100% coverage. At time of writing, there are some rumours of Turkcel & Vodafone entering into limited network sharing on 2G (GPRS) services, but these remain unconfirmed.

Meanwhile, Africa has seen a real boost this year, with Vodafone finally acquiring a majority interest in Vodacom South Africa from Telkom, as we discussed earlier this year in Consolidation hits Rainbow Nations telecom sector; Vodacom is now the flagship Vodafone brand in sub-Saharan Africa & has recently listed on the Johannesburg Stock Exchange. Another hit in this region is Vodafone’s 40% majority holding in Kenya’s Safaricom. Jointly the two companies launched the mobile payment platform M-Pesa back in 2007 & it has gome through a number of modifications & upgrades since then, winning a United Nations award along the way. The service has 5.75 million users signed up in Kenya & now that it has been proved & tested, look to Vodafone to launch M-Pesa in a number of new regions in Africa, such as Nigeria, Ghana & South Africa. An interesting video on Safaricom & M-Pesa can be viewed here : Michael Joseph

Vodafone’s controversial investment in Essar , seems to be paying off handsomely, as the Indian carrier now operates in all 26 mobile circles across the sub-continet. Service revenues jumped by 23% with the subscriber base leaping 56%, or  by 77 million subscribers in the last year. Vodafone will also be launching M-Pesa in India this year & it is thought that up to 17% of the subscriber base will ustilese the m-payment system. Vodafone-Essar recently applied & was granted both a national Internet Service Provider & National Long Distance licences, from the Indian Government, as expectations run high on the “last mile” being finally opened. The NLD licence will have an immediate effect, as Vodafone will now be able to backhaul its own national STD voice traffic & not have to rely on local carriers, which will be a welcome development since mobile voice terminations have fallen by 5% in India in the last year.

In Asia Pacific, there is only one big story & that is the merging of Vodafone Australia & Hutchinson Whampoa’s 3 in order to create a realistic competitor to government owned Telstra. The new Vodafone-Hutchinson Australia is a 50-50 JV, which will carry the Vodafone brand & now has a combined cutomer base of just over 6 million users. Vodafone will be looking to leverage its Vodafone Live! content platform here & significant cost savings on network (roaming charges) can be expected, the combined networks now have 98% coverage of metropolitan areas across the country. Vodafone will also receive a deferred payment of AU$500 million from Hutchison-Whampoa, to reflect the difference in the joint business assets (network).

So all in all, a home run for Vodafone in its first quarter of the current financial year. Considering the global economic environment, I feel that this is a great performance (although possibly helped along by currency rates) & that if the management team can keep a firm grip on the operating companies, Vodafone should be one of the strongest performing telecoms companies for 2009-2010. Continued expansion in both India & Africa, along with the introduction of services such as M-Pesa will attract & hold valuable customers. I’m long on the ADR, having bought in last week at $18.68 & am looking for it to exceed $23.50 within three months.

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Emerging Idol: Auditions for BRIC Without the “R”

american_idol-judges Today some humour & a guest post from Josh Brown from Reformed Broker …. thanks to Josh for letting us post, you can follow him on Twitter

It may be time to hold auditions to find a replacement for Russia in the BRICcountries.

The other day, the New York Times dropped this delightful little nugget on those believing that Russia is a suitable place to invest:

Russia’s Kemerovo region has notified ArcelorMittal that it will seize two of the world’s largest steel maker’s mines if production levels do not increase, the Siberian region’s government said in a statement.  “If your team is not able to stabilize production at these facilities, then we propose that you hand them over without compensation.”

Nice.  The whole BRIC (Brazil, Russia, India, China) theme may be in need of a makeover as it turns out that the former Soviet Republic is still very much up to it’s old KGB-era strong man routine.

The question becomes, what country could replace Russia that’s got the growth and demographic bona fides but a more conducive business climate for investment?

Let’s hold some auditions, American Idol-style, and see how other emerging economies stack up for membership:

Turkey

Randy: I like what I’m seeing out of Turkey’s National-100 index, a 10.5% advance year-to-date, y’all.  I’d say yes.

Simon: This country has a population of 71 million, two thirds of which are aged 15 to 64…that’s an awful lot of productive workers.

Paula: Yeah but guys, Turkey’s economy is only supposed to show flat growth in 2010.  I’m sorry Turkey, I think you’re great…just not for this competition.

South Africa

Paula: Here’s a perfect example of an exciting country, with a $280 billion economy and booming mineral exports.

Randy: Yes, but a lot of those exports are non-industrial diamonds and gold, not a lot of practical uses for what South Africa produces, man.

Simon: I have to be honest and say that that was one of the most dreadful auditions I’ve ever heard.  And for a supposedly emerging market, the Johannesburg Securities Exchange has barely recovered this year, up only 4% or so.  I’m sorry, South Africa, it’s a No.

Singapore

Randy: Singapore looks like the Real Deal right about now, the Straits Times Index is already up 35% on the year and shows no signs of quitting.  GDP growth for next year is looking like 7 and change percent.

Paula: And didn’t Jimmy Rogers sell his Manhattan townhouse and relocate his whole family there?

Simon: I’m sorry, but I don’t think so.  Singapore is as tied to China as you get, they do about 90 billion a year worth of trade together and have longstanding agreements in place that basically make the two economies inseparable.  I’m going to have to pass on this, we already have enough Chinese representation in BRIC.

Dubai

Randy: I gotta keep it real with this one, Dog.  Aren’t we talking about an economy that’s basically 100% tied to high oil prices?

Simon: I completely agree with Randy, minus some steel exports, that’s exactly like Russia, which we’re trying to replace in BRIC, the last thing we want to do is add it’s mirror image.

Paula: You guys have the Dubai story all wrong, they’ve been redeploying the oil wealth to stimulate other parts of the economy, like the gold-plated Rolls Royce sector, for example.

Australia

Randy: Australia?  I thought this competition was for emerging markets only, y’all.  I know GDP growth for next year is estimated at 6%, but how old are you, Australia?

Paula: You gotta give it up to them, they have a fully developed economy, yet they’re the key supply line to some of the growthiest economies in Asia.  Wait, isgrowthiest a real word?

Simon: For me, it’s a yes.  If we refer to Brazil as the Commodities Supermarketto Chinese growth, then Australia is the Commodities Convenience Store, chock full of metals and minerals, yet right down the street.  And Paula, you should read a book one day.

Peru

Paula:  Look, we all know that the entire economy of Peru is just $127 billion and that’s like 7% of the economy of Brazil.  But I think Peru is going to broaden out.  Just because it doesn’t have a huge population, doesn’t mean it can’t become a big investment theme.  I say Peru deserves a chance.

Randy: It may be small, but it’s growing!  I’m feelin’ the growth!  10% GDP!  Peru, you’re on fire, Dog.  For me it’s a Yes.

Simon: Not to mention a 75% return for the IGBVL stock market so far in 2009, Peru is the very definition of hot.  Congratulations Peru, you’re through to the next round.

Randy: You’re going to Hollywood, Dog!

___

Peru exits ballroom with yellow sheet of paper, vigorously hugs Ryan Seacrestand let’s out celebratory yelp.  Assorted family members wipe tears from eyes.  Cut to Coke commercial.


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Goldman Sachs : Ten Things for India to Achieve its 2050 Potential (A synopsis)

India FlagIn recent years, we have published a number of papers pointing to remarkably positive potential growth for India up to 20501. Having the potential and actually achieving it are two separate things. In this paper, we outline ten crucial steps
that we believe India must take in order to achieve its full potential. In our latest annual update to our Growth Environment Scores (GES), India scores below the other three BRIC nations, and is currently ranked 110 out of a set of 181 countries assigned GES scores. If India were able to undertake the necessary reforms, it could raise its growth potential by as much as 2.8% per annum, placing it in a very strong position to deliver impressive growth.

We highlight ten key areas where reform is needed. In all likelihood, they are not the only ten, but we consider them to be the most crucial:

  • Improve governance. Without better governance, delivery systems and effective implementation, India will find it difficult to educate its citizens, build its infrastructure, increase agricultural productivity and ensure that the fruits of economic growth are well established.
  • Raise educational achievement. Among more micro factors, raising India’s educational achievement is a major requirement to help achieve the nation’s potential. According to our basic indicators, a vast number of India’s young people receive no (or only the most basic) education. A major effort to boost basic education is needed. A number of initiatives, such as a continued expansion of Pratham and the introduction of Teach First, for example, should be pursued.
  • Increase quality and quantity of universities. At the other end of the spectrum, India should also have a more defined plan to raise the number and the quality of top universities.
  • Control inflation. Although India has not suffered particularly from dramatic inflation, it is currently experiencing a rise in inflation similar to that seen in a number of emerging economies. We think a formal adoption of Inflation Targeting would be a very sensible move to help India persuade its huge population of the (permanent) benefits of price stability.
  • Introduce a credible fiscal policy. We also believe that India should introduce a more credible medium-term plan for fiscal policy. Targeting low and stable inflation is not easy if fiscal policy is poorly maintained. We think it would be helpful to develop some ‘rules’ for spending over cycles.
  • Liberalise financial markets. To improve further the macro variables within the GES framework, we believe further liberalisation of Indianfinancial markets is necessary.
  • Increase trade with neighbours. In terms of international trade, India continues to be much less ‘open’ than many of its other large emerging nation colleagues, especially China. Given the significant number of nations with large populations on its borders, we would recommend that India target a major increase in trade with China, Pakistan and Bangladesh.
  • Increase agricultural productivity. Agriculture, especially in these times of rising prices, should be a great opportunity for India. Better specific and defined plans for increasing productivity in agriculture are essential, and could allow India to benefit from the BRIC-related global thirst for betterquality food.
  • Improve infrastructure. Focus on infrastructure in India is legendary, and tales of woe abound. Improvements are taking place, as any foreign business visitor will be aware, but the need for more is paramount. Without such improvement, development will be limited.
  • Improve Environmental Quality. The final area where greater reforms are needed is the environment. Achieving greater energy efficiencies and boosting the cleanliness of energy and water usage would increase the likelihood of a sustainable stronger growth path for India. Perhaps not all these ‘action areas’ can be addressed at the same time, but we believe that, in coming years, progress will have to be made in all of them if India is to achieve its very exciting growth potential.

The rest of this white paper can be found at Goldman Sachs Global Economic Website

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MTN-Bharti : a long winding road from India to South Africa

bharti-airtel-mtn-mergerIndia’s Bharti Airtel & South African operator MTN returned to the bargaining table this week, over a merger that could create a $20 billion mobile giant. The potential deal is attractive for both parties & if successful, would create a leading telecommunications service provider group aligning Bharti’s market leading Indian business with MTN’s market leading African and Middle Eastern operations. Combined operations would result in the group enjoying leading positions in three of the fastest growing wireless emerging markets ; India, Africa & the Middle East, with no overlapping footprint & subscriber base of circa 200 million.

Under the terms of the deal Bharti will acquire a 49% shareholding in MTN, in turn MTN and its shareholders would acquire a 36% percent economic interest in Bharti, of which 25% would be held by MTN, the remainder held directly by MTN shareholders, with the long term goal being a fully merger. The two companies have agreed to continue exlusive discussions until the end of July, at which time any issues will be resolved or other potential partners will be engaged.

Sunil Bharti Mittal, Chairman and Managing Director of Bharti, said “We are delighted at the prospect of developing a partnership with MTN to create an emerging market telecom powerhouse. Both companies would stand to gain significant benefits from sharing each other’s best practices in addition to savings emanating from enhanced scale. We see real power in the combination and we will work hard to unleash it for all our shareholders.”

“The rationale for this potential transaction between MTN and Bharti is highly compelling,” said Phuthuma Nhleko, CEO of MTN. “We are excited at the prospect of teaming up with Bharti, India’s number one wireless operator and one of the most strongly capitalised players amongst its emerging market peer group. This would create a highly visible commercial partnership between South Africa and India,”

Bharti & MTN have been here before, almost exactly a year ago. Previous talks were torpedoed by a lack of clear understanding on control between the two companies. At the last minute, MTN proposed a different structure where Bharti was to become a subsidiary of MTN. Bharti retreated from the deal on the basis that it felt MTNs position was a way of gaining indirect control of the combined entity, which would have compromised the minority shareholders of Bharti. This time round it has been made clear from the start that Bharti will be the primary vehicle for both Bharti and MTN to pursue further expansion in India and Asia while MTN would be the primary vehicle for both Bharti and MTN to pursue further expansion in Africa and the Middle East. Most importantly, Bharti would have substantial participatory and governance rights in MTN enabling it to fully consolidate the accounts of MTN.

When this was announced earlier this week, I decided to hold off on posting, as I wanted to see what would forthcoming once the dust had settled & also to get a better feel for some of the more convoluted relationships involved. One of the potential major hurdles to this deal from my perspective was the stance of Singapore Telecom (SingTel) which owns a 30% stake in Bharti Airtel. Bloomberg reported that SingTel would end up with a diluted position of 20% at the end of any full merger between the two. However it would seem that this could be offset by synergies across all of the combined networks of Bharti, MTN & SingTel. In addition to its strong domestic business, SingTel owns Australian carrier SingTel Optus & holds significant stakes in carriers in Bangladesh, Indonesia, Pakistan, Thailand, and the Philippines, commanding upwards of 290 million subscribers themselves. In the same Bloomberg report, SingTel spokesman Peter Heng states that “SingTel will remain a significant shareholder and strategic partner in Bharti post any successful transaction. We will continue to equity account for Bharti, in its enlarged form post the transaction if this is successful.”

Another potential challenge that was aired, is opposition by minority shareholders in MTN, however it has been reported today that the Mikati family which owns a 10% stake in MTN via the M1 Group, has said it will back the deal. The majority shareholder in MTN is South Africa’s state pension fund PIC, with a holding of 13.5%, to date there has been no statement from them. Other minority shareholders of MTN include Allan Gray, Polaris, Coronation and Stanlib, it would seem that these companies are not so bullish on the deal, at least not until further details come clear.

The South African press also gave some weight to the position of the highly politicised trade union federation COSATU (Congress of South African Trade Unions) which recently tried to scupper the full takeover of Telkom’s stake in Vodacom by Vodafone. However, COSATU spokesman, Mr Patrick Craven, has said the MTN deal was a different situation to that of the national carrier ;  “Telkom has always been 50% owned by the public & the move was part of our policy agenda against privatisation. MTN has always been a private company”

So it would seem that conditions are favourable to the potential transaction going forward, which would bring to fruition a long held ambition for Bharti to move into Africa, which remains the most underdeveloped of emerging markets regards telecoms. By leveraging across the combined networks of Bharti Airtel, MTN, SingTel & the Bridge Alliance (11 major operatots in Asia-Pac), the new Bharti-MTN will become a major powerhouse & definitely a very attractive investment for those involved in Global & Emerging Markets.

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