ACCA P3 : Choices ...!! War for WARID (telecom) The race for Warid’s acquisition is heating up. Just a few months after the Abu Dhabi Group regained Warid’s full control from SingTel earlier this year, it had become clear that the underperforming operator will finally be put up for sale, following years of speculation. Among Warid’s potential suitors, it is Etisalat, the managing group of telecom giant PTCL and its subsidiary Ufone that has made the first offer. PTCL has also shared this material information in a September 30 notice to the three local bourses, disclosing that the company has submitted a 30-day, non-binding offer to acquire 100 percent shares of Warid Telecom from its UAE-based owner. One understands that Warid’s auction process is in its early stage and other interested bidders will submit their offers in the days and weeks to come till the time Warid stops soliciting any new bids and moves to the next stage of the auction. It will be some time before matters such as due diligence and regulatory approvals are in place. There is no reason to rule out the bidding possibility from Orascom’s Mobilink or Telenor Group’s Telenor Pakistan. But it appears that Zong’s sponsor, China Mobile, is associating a greater value to the Warid acquisition compared to the top two local operators. Reportedly, Zong’s country management has recently expressed strong interest in buying out Warid. Cellular subscribers stood at 125 million as of May end this year, PTA statistics show. Zong has outgrown all other operators in recent years in terms of new subscriber additions. But the subscription growth has slowed down due to reasons such as access issues in remote areas, voice segment saturation, stringent rules for acquiring new subscribers, and of course, the high-base effect. Amid restricted organic growth, amalgamating Warid’s subscriptions would allow Zong to become the second biggest player in a four-player market. Same goes for Ufone if it succeeds in counting Warid’s subscribers as its own. That will put Mobilink’s market leadership under some pressure, whereas Telenor, a consistent number two will slip to number three spot. This auction may give some insight into the fact that cellular operators will want to enter the market of 3G data services well-prepared. Zong, which is said to have the lowest average revenue per user, will do well to absorb the high-end, post-paid users Warid has been holding on to, besides its youth-oriented sub-brands. Same Warid attributes would allow Ufone to solidify its own market position in the post-3G era. It would be interesting to see how much dough the giants like China Mobile and Etisalat would be willing to spend from their war chests. In a way, the value proposition attached to Warid will give a clue into the attractiveness of Pakistan’s telecom fundamentals to both existing and new operators/investors.
Posted on: Wed, 02 Oct 2013 06:26:21 +0000
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