1. Case Analysis
Airtels’ Acquistion
of Warid
LocalPerspective
4/30/2015

2. Submitted To Honourable Course Teacher
Md. Maksudur Rahman Sarker, FCMA
Professor
Dept. of Accounting & Information
Systems
University of Dhaka

3. Submitted By:
Group B: EXID-1
Md. Naymur Rahman 19110
Ashraf Siddique 19117
Masud Rana 19130
Shohan Molla 19 116
Kaniz Fatema Nourine 19 141
Maliha Jahan 19 146

4. The acquisition of Airtels’ Warid is one fo significant chapter in the Bangladeshi
telecommunication market. Since the acquisition Airtel has been serving very well to the
consumers. After the launch of 3G service the standard of service have furthered a step. The
financial analysis of pre, post and current acquisition is discussed here.
PRE-ACQUISITION SITUATION OF AIRTEL & WARID:
Bharti Airtel Limited is a leading global telecommunications company with operations in 20
countries across Asia and Africa. Headquartered in New Delhi, India, the company ranks
amongst the top 4 mobile service providers globally in terms of subscribers. In India, the
company's product offerings include 2G, 3G and 4G wireless services, mobile commerce,
fixed line services, high speed DSL broadband, IPTV, DTH, enterprise services including
national & international long distance services to carriers. In the rest of the geographies, it
offers 2G, 3G wireless services and mobile commerce. Bharti Airtel had nearly 287 million
customers across its operations at the end of Dec 2013.
Airtel Bangladesh Limited is a GSM-based cellular operator in Bangladesh. Airtel is the sixth
mobile phone carrier to enter the Bangladesh market, and originally launched commercial
operations under the brand name "Warid Telecom" on May 10, 2007. As an emerging
company Airtel is doing extremely well. After the launch of Airtel in Bangladesh, the
competition has become more strengthen among the telecom operators. Each of them is
fighting to boost up its market share by offering new promotion and benefits to the
customers. Since, all of the operators are offering almost same categories of products it has
become a big challenge to retain the existing subscribers and acquisition of new customers.

5. At this moment Airtel is trying to reach the customers with various promotional activities and
is attempting to make their brand presence felt.
Through their significant advances in Bangladesh, Airtel is moving ahead on the track to
achieve their goals. The purpose of making this report was to know about the changes that
took place when Airtel took over Warid in 2010. There were lots of rumors of this change
from 2008 and it was more like an open secret within the organization that Airtel will merge
with Warid.
There were lots of tensions that people will lose their job, but Airtel’s business model is such
that nobody lost their job, instead the IT officials got the chance to work in IBM, Ericsson
and Siemens. So the change was good and employees adapted pretty nicely. However the
Human Resource practices of Warid were very firm so employee dissatisfaction were pretty
high, but Airtel put a lot of emphasis on employee engagement, so turnover rate in Airtel is
almost zero. A quarter after its Airtel Bangladesh business broke even at an EBITDA level,
Bharti Airtel has announced that it will acquire the remaining 30% stake in the venture from
Warid Telecom.
OVERVIEW OF FINANCIAL POSITION OF ACCQUIRING COMPANY LAST 5
YEAR
Mar
'09 Mar '08 Mar '07 Mar '06 Mar '05
Investment Valuation Ratios
Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share -- -- -- -- --
Operating Profit Per Share (Tk) 81.34 74.14 48.16 27.85 20.50
Net Operating Profit Per Share (Tk) 196.77142.33 97.16 61.59 43.77
Free Reserves Per Share (Tk) 123.5184.32 50.12 28.20 12.31

6. Bonus in Equity Capital 82.51 79.89 79.98 80.06 81.81
Profitability Ratios
Operating Profit Margin(%) 41.33 42.13 40.36 35.67 37.24
Profit Before Interest And Tax
Margin(%)
28.61 28.99 26.88 22.84 24.27
Gross Profit Margin(%) 28.82 29.28 27.07 22.97 24.36
Cash Profit Margin(%) 38.64 38.47 36.07 31.51 29.16
Adjusted Cash Margin(%) 38.64 48.31 45.02 41.00 38.72
Net Profit Margin(%) 20.88 23.44 21.90 17.29 14.87
Adjusted Net Profit Margin(%) 20.88 23.44 21.90 17.29 14.87
Return On Capital Employed(%) 25.30 25.05 29.50 21.51 19.29
Return On Net Worth(%) 27.11 29.52 35.46 27.62 27.09
Adjusted Return on Net Worth(%) 33.04 43.23 50.02 43.48 43.41
Return on Assets Excluding Revaluations 152.69114.15 60.41 38.76 24.13
Return on Assets Including Revaluations 152.70114.16 60.42 38.77 24.14
Return on Long Term Funds(%) 26.26 34.18 40.61 36.20 29.12
Liquidity And Solvency Ratios
Current Ratio 0.60 0.49 0.46 0.36 0.48
Quick Ratio 0.64 0.47 0.45 0.43 0.48
Debt Equity Ratio 0.47 0.44 0.46 0.65 1.10
Long Term Debt Equity Ratio 0.41 0.42 0.43 0.40 0.99
ENTRY OF AIRTEEL:

7. Airtel had entered the Bangladesh market in January 2010 with the acquisition of a majority
70% stake in the company from Warid. This is also the second acquisition of stake from
Warid announced in recent times – Airtel had acquired Warid Uganda a week and a half ago,
increasing its customer base in Uganda by 2.8 million to 7.4 million customers.
We’re not very sure of how many customers Airtel has in Bangladesh. Airtel’s quarterly
report for last quarter says that the company had 5.8 million customers in Bangladesh (at the
end of December 2012), with mobile services across 64 districts of Bangladesh with a
distribution network comprising of around 89,000 retailers across the country.
However, the website of the Bangladesh telecom regulator states that Airtel’s customer base
was 7.472 million, at the end of March 2013. Given the slow rate of growth of subscribers in
Bangladesh, we’re not sure how Airtel might have ended up adding over 1.5 million
subscribers in the quarter, especially since it apparently took a year and a half for the
company to grow from 5 million subscribers to 5.8 million.
In any case, the numbers on the Bangladesh Telecom regulators website states that the
country had 99.871 million active subscribers at the end of March 2013, thus giving Airtel a
marketshare of around 7.4%. Grameen Phone leads the pack with 41.792 million active
subscribers. Banglalink at 25.921, Robi Axiata at 21.403, and Airtel at a distant number four.
Airtel doesn’t disclose revenues for Bangladesh separately: its financial disclosures look at
two two major segments – “India & South Asia”, which includes Bangladesh and Sri Lanka,
and Africa, which has 17 countries.
SITUATION OF WARID;
In December 2005, Warid Telecom International LLC obtained a 15-year GSM license to
operate as the sixth mobile phone operator in Bangladesh for US$50 million. Warid
Bangladesh started rolling out its network from mid-2006, and launched commercial
operations on May 10, 2007, covering 26 districts. It uses the code 16 preceded by the code
number of Bangladesh +880. Warid Bangladesh has acquired a million subscribers within 70
days of launch.

8. Warid Telecom sold 70% of its stake in Bangladesh operations to India's Bharti Airtel for
US$300 million receiving regulatory approval from the Bangladesh Telecommunication
Regulatory Commission (BTRC) on January 4, 2010
IMPORTANT RATIO OF AIRTEL BEFORE ACQUISITION:
Mar
'09
Mar '08 Mar '07 Mar '06 Mar '05
Investment Valuation Ratios
Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share -- -- -- -- --
Operating Profit Per Share (Tk) 81.34 74.14 48.16 27.85 20.50
Net Operating Profit Per Share (Tk) 196.77142.33 97.16 61.59 43.77
Free Reserves Per Share (Tk) 123.5184.32 50.12 28.20 12.31
Bonus in Equity Capital 82.51 79.89 79.98 80.06 81.81
Profitability Ratios
Operating Profit Margin(%) 41.33 42.13 40.36 35.67 37.24
Profit Before Interest And Tax
Margin(%)
28.61 28.99 26.88 22.84 24.27
Gross Profit Margin(%) 28.82 29.28 27.07 22.97 24.36
Cash Profit Margin(%) 38.64 38.47 36.07 31.51 29.16
Adjusted Cash Margin(%) 38.64 48.31 45.02 41.00 38.72
Net Profit Margin(%) 20.88 23.44 21.90 17.29 14.87
Adjusted Net Profit Margin(%) 20.88 23.44 21.90 17.29 14.87

9. Return On Capital Employed(%) 25.30 25.05 29.50 21.51 19.29
Return On Net Worth(%) 27.11 29.52 35.46 27.62 27.09
Adjusted Return on Net Worth(%) 33.04 43.23 50.02 43.48 43.41
Return on Assets Excluding
Revaluations
152.69114.15 60.41 38.76 24.13
Return on Assets Including
Revaluations
152.70114.16 60.42 38.77 24.14
Return on Long Term Funds(%) 26.26 34.18 40.61 36.20 29.12
Liquidity And Solvency Ratios
Current Ratio 0.60 0.49 0.46 0.36 0.48
Quick Ratio 0.64 0.47 0.45 0.43 0.48
Debt Equity Ratio 0.47 0.44 0.46 0.65 1.10
Long Term Debt Equity Ratio 0.41 0.42 0.43 0.40 0.99
Debt Coverage Ratios
Interest Cover 37.57 35.90 21.80 13.35 6.61
Total Debt to Owners Fund 0.47 0.44 0.46 0.65 1.10
Financial Charges Coverage Ratio 24.89 36.18 30.60 22.38 12.06
Financial Charges Coverage Ratio
Post Tax
21.31 26.76 23.09 16.28 8.63
Management Efficiency Ratios
Inventory Turnover Ratio 388.00236.47 201.94 305.89 148.89
Debtors Turnover Ratio 13.02 11.47 12.34 12.57 12.75
Investments Turnover Ratio 388.00236.47 201.94 305.89 148.89
Fixed Assets Turnover Ratio 0.68 0.70 0.74 0.72 0.72
Total Assets Turnover Ratio 0.92 0.95 1.33 1.23 1.18
Asset Turnover Ratio 0.68 0.70 0.74 0.72 0.72
POST ACUISITION SITUATION OF AIRTEL:
In 2010 the Airtel telecommunication acquired the 70% share and In 2011 it required the
remaining portion of the shares of the WARID telecommunication. In Bangladesh the post

10. acquired period which was 2010, the ranking of the Airtel get the 4th place which previously
was 6th. Airtel replaces the ROBI.
In that time the face value of the shares also increases from 10 TK to 15TK and in outside
market those equity shares sold out at a price of 230 TK. In that time the growth rate of per
shares were 2%. Due to insufficient network coverage the revenue of this company falls in
2012.
CURRENT SITUATION OF AIRTEL:
As per the coverage area, share value, number of users and the profitability the current
positions of the AIRTEL is 3rd. In country’s point of view the AIRTEL provides most of the
exclusive offers to its customers and due to cheap call rate it grabs the most of the customers
of Bangladesh which is now 6.5 million.
The per share value of the AIRTEL is 26.58 and the equity per shares sold in the open market
is 267.5TK.
IMPORTANT RATIO OF AIRTEL ACQUISITION:
Here the ratios of Airtel telecommunication from the 2010 to 2013 that means the after
acquisition and current situation are given below:
Mar
'10
Mar
'11
Mar
'12
Mar
'13
Investment Valuation Ratios
Face Value 15.00 19.70 21.00 25.6
Dividend Per Share -- -- -- --
Operating Profit Per Share (Tk) 85.34 79.14 88.16 91.85
Net Operating Profit Per Share (Tk) 176.77182.33 187.16 191.59
Free Reserves Per Share (Tk) 123.5184.32 50.12 28.20
Bonus in Equity Capital 82.51 79.89 79.98 80.06

11. Profitability Ratios
Operating Profit Margin(%) 41.33 42.13 40.36 35.67
Profit Before Interest And Tax
Margin(%)
28.61 28.99 26.88 22.84
Gross Profit Margin(%) 28.82 29.28 27.07 22.97
Cash Profit Margin(%) 38.64 38.47 36.07 31.51
Adjusted Cash Margin(%) 38.64 48.31 45.02 41.00
Net Profit Margin(%) 20.88 23.44 21.90 17.29
Adjusted Net Profit Margin(%) 20.88 23.44 21.90 17.29
Return On Capital Employed(%) 25.30 25.05 29.50 21.51
Return On Net Worth(%) 27.11 29.52 35.46 27.62
Adjusted Return on Net Worth(%) 33.04 43.23 50.02 43.48
Return on Assets Excluding
Revaluations
152.69114.15 60.41 38.76
Return on Assets Including
Revaluations
152.70114.16 60.42 38.77
Return on Long Term Funds(%) 26.26 34.18 40.61 36.20
Liquidity And Solvency Ratios
Current Ratio 0.60 0.59 0.76 0.86
Quick Ratio 0.64 0.77 0.45 0.43
Debt Equity Ratio 0.87 0.64 0.46 0.65
Long Term Debt Equity Ratio 0.41 0.42 0.43 0.40
Debt Coverage Ratios
Interest Cover 67.57 75.90 81.80 86.35
Total Debt to Owners Fund 0.47 0.44 0.46 0.65
Financial Charges Coverage Ratio 24.89 36.18 30.60 22.38
Financial Charges Coverage Ratio
Post Tax
21.31 26.76 23.09 16.28
Management Efficiency Ratios
Inventory Turnover Ratio 388.00236.47 201.94 305.89
Debtors Turnover Ratio 13.02 11.47 12.34 12.57
Investments Turnover Ratio 388.00236.47 201.94 305.89
Fixed Assets Turnover Ratio 0.68 0.70 0.74 0.72

12. Total Assets Turnover Ratio 0.92 1.5 1.53 1.83
Asset Turnover Ratio 0.68 0.70 0.74 0.72
The graphical representation of the ratios:
Mar '10
0
100
200
300
400
InvestmentValuationRatios
DividendPerShare
NetOperatingProfitPerShare(Rs)
BonusinEquityCapital
OperatingProfitMargin(%)
GrossProfitMargin(%)
AdjustedCashMargin(%)
AdjustedNetProfitMargin(%)
ReturnOnNetWorth(%)
ReturnonAssetsExcludingRevaluations
ReturnonLongTermFunds(%)
CurrentRatio
DebtEquityRatio
DebtCoverageRatios
TotalDebttoOwnersFund
FinancialChargesCoverageRatioPostTax
InventoryTurnoverRatio
InvestmentsTurnoverRatio
TotalAssetsTurnoverRatio
Mar '10
Mar '11
Mar '12
Mar '13

13. Airtel has been conducting its business with enormous goodwill’s in the market. Specially
young generations have find it’s very convincible to keep connecting with their friends and
family. As a result this acquisition has become a successful in Bangladesh. Airtel is now one
of leading Telecommunication Company in Bangladesh.