Warid buyout to lower Bharti`s liquidity, increase risk: S&P

Last Updated: Wednesday, January 13, 2010 - 21:18

Mumbai: Bharti Airtel`s proposed acquisition of 70 per cent stake in Warid Telecom International`s Bangladesh operations may marginally lower the Indian company`s liquidity and increase its business risk, leading rating agency Standard & Poor`s said on Wednesday.

The Indian mobile services provider yesterday agreed to buy 70 per cent stake in Bangladesh-based Warid Telecom. Bharti plans to make USD 300 million fresh investment in thecompany, thus taking the overall investment to USD 1 billion.
>"We expect the acquisition to marginally lower
Bharti`s liquidity and increase its business risk because of
the higher country risk associated with Bangladesh and future investments to improve Warid`s weak market position in Bangladesh," Standard & Poor`s Ratings Services said in a statement here.

However, in our opinion, Bharti is experienced in running low-cost operations in an emerging market, given the company`s strong position as an integrated player in the significantly larger Indian telecom market, it said.
S&P said its rating on Bharti Airtel is not affected by the company`s stake acquisition in Warid.

Bharti plans to invest USD 300 million, from its internal cash resources, primarily toward network expansion of Warid`s Bangladesh operations. The available information on the operating performance and financial profile of the acquired entity is currently limited, the release said.

The proposed acquisition is in line with Bharti`s strategy to expand its international operations, especially in emerging markets that provide significant growth opportunities.

Meanwhile, global rating agency Standard & Poor`s said that rating of Bharti is not affected by the company acquiring 70 per cent stake in Warid Telecom International`s Bangladesh operations.

"The proposed acquisition is in line with Bharti`s strategy to expand its international operations, especially in emerging markets that provide significant growth opportunities," S&P said in a statement.

The rating agency has assigned BBB- rating to the company, which is the lowest investment grade rating.

PTI



First Published: Wednesday, January 13, 2010 - 21:18

More from zeenews

 
comments powered by Disqus