Hardly a fortnight since Bharti Airtel acquired Warid Uganda operations, Bharti has also been acquired by Qatar. According to Reuters news, the gulf state of Qatar has bought a 5 percent stake in the Indian telecoms firm Bharti Airtel Ltd for US$1.26 billion. The deal is being channelled through Qatar Foundation Endowment and a source close to QFE said it would be an active investor in Bharti Airtel, securing a board seat at the world’s fourth biggest mobile phone company by customer base.
The purchase by QFE pushes India ahead of China to top Asia’s inbound league table for mergers and acquisitions this year. According to Reuters data, India’s inbound Mergers and Acquisitions now total US $9.83 billion so far this year, compared with China’s US $7.7 billion and Australia’s US $6.9 billion.
Qatar’s first major investment in a listed Indian company provides Bharti Airtel with much-needed capital that strengthens its balance sheet and future growth. Bharti’s profit has fallen for three years in a row, hit by fierce competition in its main Indian market, and also dragged down by losses at its African operations, which it bought in 2010 from Kuwait’s Zain for US$9 billion.
Controlled by billionaire Sunil Mittal and also nearly a third owned by Southeast Asia’s top phone carrier SingTel , Bharti had a US $11.7 billion of net debt, or about 2.5 times its operating profit, as of end March 2013 according to Reuters. Bharti operates in 20 Asian and African countries and has about 260 million mobile phone customers. The investment by QFE, a recently established arm of the Qatar Foundation, is in line with the gas rich state’s strategy of picking minority stakes
in large global companies such as Royal Dutch Shell, Tiffany & Co and Siemens. The QFE is an investment vehicle of the Qatar Foundation controlled by Sheikha Mozah, the second wife of the country’s emir.
Source: CEO Mag