Small BusinessWarid buyout to lower Bharti's liquidity, increase risk: S&P
Bharti Airtel"s proposed acquisition of 70 per cent stake in Warid Telecom of Bangladesh may marginally lower the Indian company"s liquidity and increase its business risk, leading rating agency Standard & Poor"s (S&P) said today.
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The Indian mobile services provider yesterday agreed to buy 70 per cent stake in Bangladesh-based Warid Telecom. Bharti plans to make $300 million fresh investment in the company, thus taking the overall investment to $1 billion.
"We expect the acquisition to marginally lower Bharti"s liquidity and increase its business risk because of the higher country risk associated with Bangladesh and future investments to improve Warid"s weak market position in Bangladesh," Standard & Poor"s Ratings Services said in a statement here.
However, in our opinion, Bharti is experienced in running low-cost operations in an emerging market, given the company"s strong position as an integrated player in the significantly larger Indian telecom market, it said.
S&P said its rating on Bharti Airtel is not affected by the company"s stake acquisition in Warid.