Bharti Airtel Ltd.: Going Global
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Case Details:
Case Code : BSTR384
Case Length : 25 Pages
Period : 2007-2010
Pub Date : 2011
Teaching Note : Not Available
Organization : Bharti Airtel Ltd
Industry : Telecom
Countries : Global; Africa; Middle East; Asia
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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FORAY INTO AFRICA Contd...
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Many analysts felt that BAL had settled for the second best, and called the deal a ‘forced marriage'. They said that the deal with Zain was nowhere as attractive as the one contemplated with MTN, especially at a price tag of US$10.7 billion. The reasons for this, they said, were declining profits and the low contributions of the fifteen acquired businesses to the group's revenues. Zain's African assets accounted for about 58% of its total subscriber base (71.8 million), but they made up only a fraction of its net profits6. Though BAL was able to acquire a global footprint and a much larger customer base through this deal, industry experts believed it would be difficult for it to leverage on the business model and strategies which had kept it afloat and ahead of the competition in India.
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Africa represented diverse cultures with many of the countries having minimal infrastructural resources. Further, BAL had to function in fifteen different countries, each of which came with its own different regulatory requirements and geopolitical risks. Jaydeep Ghosh, Executive Director of KPMG 7, said, "Bharti has replicated the low-cost model through outsourcing in India, but depending upon different geographies (in Africa), it will not be easy."8
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