Stepping up its consolidation drive, telecom major Bharti Tele Ventures Limited has reached an agreement with the Analjit Singh-promoted Max Group to acquire its 100 per cent equity stake in C Max Infocomm and its wholly owned subsidiary, Comsat Max.
C Max Infocomm, which is involved in selling and installing VSAT terminals, holds the entire equity share capital of Comsat Max, a service provider. The deal was clinched through Bharti Infotel, the fixed line and VSAT arm of Bharti Tele Ventures.
The all-cash transaction, valued at about Rs 330 million ($7 million), is expected to give a fillip to Bharti’s existing VSAT infrastructure and augment its telecom and broadband services as Comsat Max has a considerable presence in the financial and banking sector. The acquisition would thus add to Bharti’s list of corporate customers. The company already provides telecom and broadband solutions, including VSAT services, to a large number of enterprises and corporate customers.
For Bharti, the acquisition is a strategic move. It has for some time been scouting for acquisitions that would add to its operations and help it take on competition. Bharti has about 20 per cent share in the wireless market, and its subscribers have grown at a significant compounded annual growth rate of 121 per cent in the past five years, higher than the industry growth of 95 per cent in the same period. Bharti has a mobile subscriber base of over 10 million as of January 2005 and over 800,000 fixed line customers as of December 2004.
“The acquisition will make Bharti one of the largest players in the VSAT service industry and result in huge synergistic benefits arising due to integration of the two organisations,” noted Badri Agarwal, president, Bharti Infotel, in a statement. “With a new data centre and hubs in cities like Delhi, Mumbai and Bangalore being connected with over 8,500 VSAT locations, Bharti would have the necessary scale and presence to offer integrated telecom business solutions to corporates,” Agarwal added.
The agreement gives Bharti right over all Comsat Max’s assets and liabilities, including VSAT hubs in Mumbai and Delhi along with a data centre and 4,300 installations across the country. The deal also involves absorbing 130 telecom personnel from Comsat Max.
Comsat’s hubs in Delhi and Mumbai will expectedly complement Bharti’s existing hub in Bangalore, and strengthen its capabilities to deploy VSAT services across the country. Together with Comsat’s installations, Bharti’s total installed base is now being pegged at 9,000. This acquisition will effectively make Bharti the second largest VSAT operator in the country after Hughes Escorts Communication Limited.
While Max India has exited several businesses in the last few years to focus on its core areas of health care and life insurance, for Bharti the move is very much in line with its drive to be a leading private integrated player in the highly competitive telecom industry. Since unified licensing has been given the go-ahead, Bharti officials have expressed interest in acquiring some of the smaller wireless operators amid the ongoing consolidation in the telecom industry.
With increasing focus on broadband and with BSNL and MTNL jumping into the fray with aggressive broadband offerings, private players are pulling all stops to combat the threat. In that effort too, Bharti expects to reap benefits from this deal as it hopes to optimise international and national bandwidth and leased line charges. Plus it expects to leverage Comsat’s considerable presence in the country’s financial sector.
With the $100 million VSAT industry expected to register a growth of more than 20 per cent this year, the deal is perfectly timed.
