News From Telecom World

Vodafone, Etisalat line up to buy stakes in Warid’s Bangladesh operations

Posted on: October 15, 2008

Two global cell phone giants have started negotiations with Warid Telecom to buy a ‘majority’ stake in its Bangladesh operations, company and telecom sector sources said Tuesday (14 Oct ‘08).

Britain-based Vodafone and the United Arab Emirates (UAE)’s Eitisalat began the talks with Warid’s parent company Abu Dhabi Group more than a month’s back as the two giants seek their presence in Bangladesh’ s booming telecom market.

Sources in the company said Warid wants to sell its majority stake to the two companies or either of the two, as the company wants to concentrate in its key growth markets in the Middle East and Africa.

“At this stage all the options are on the table. The company can sell all its stake to Vodafone or Etisalat or majority stake to either of the two,” a company official said.

Company chief executive officer Muneer Farooqui, however, said he was not aware of any negotiations between Warid’s parent group and the two global mobile phone giants.

“I am not aware of anything. Not to the best of my knowledge,” he told the FE.

Telecom sources said poor growth in the last one year and intense competition among the six operators in the fast growing Bangladesh market prompted Warid to consider selling off its stake or the entire operation to interested companies.

The company started its operations in Bangladesh — the sixth in a crowded market — in February 2007 with a network spreading 26 growth districts. By November 2007, the network covered all the major cities and 61 districts in the country.

But in the 20 months since it launched its operation, the company could add only around 3.75 million customers, with this year’s growth much slower than the first year.

Officials said the growth was hit by slow network expansion, making it impossible for the company to compete in the same wavelength with leading operators, Grameenphone, Banglalink and AKTEL.

Vodafone, the largest mobile phone operator in Europe, targeted Bangladesh market since early this year when it made an abortive attempt to buy local group AK Khan’s 30 per cent stake in AKTel, the third largest mobile phone company in the country.

Top Japanese mobile phone company later bought the AK Khan’s stake for a whopping US$350 million, the biggest sell in the country’s history.

Abu Dhabi-based Eitisalat has been on a buying spree in the last two years, stakes in the companies across Asia and Africa, It now operates 16 countries, boasting more than 64 million subscribers till August this year.

Analysts said the entry of Vodafone or Etisalat would shake off the Bangladesh market as the two companies have been sitting on piles of fund to invest in the growth market.

“Growth potentials in Bangladesh market is huge,” said an ex-director of a leading mobile phone company, speaking on condition of anonymity.

“If a company invests big in the market and employs the right strategy, it can take the fight to Grameenphone and Banglalink easily. The market needs fresh ideas to shake up the competition,” he said.

Bangladesh’s mobile phone market has been one of the fastest in the world, growing from 1.5 million subscribers in 2004 to 45.4 million in August this year.

Source: Financial Express

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