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Asia

Bhutan: Bharti's Next Stop?

7:20 AM -- All eyes are currently on Bharti Airtel Ltd. (Mumbai: BHARTIARTL)'s US$10.7 billion effort to buy its way into the African mobile market, but the Indian operator is also looking closer to home to further its international expansion. (See Bharti's African Odyssey.)

Bharti Airtel, which recently formed an international unit and announced its expansion in Bangladesh, is keen to offer its services in Bhutan, a land-locked country to the northeast of India, reports Bhutanese newspaper Kuensel. (See Bharti Buys Stake in Warid, Asia Watch: Buy Me, I'm Hot!, and Bharti Forms International Unit.)

But while the attraction of a large investment in Africa is clear -- tens of millions of extra customers generating increasing revenues -- the case for an entry into Bhutan is not so obvious.

Bhutan has a population of around 700,000 -- far less than the number of subscribers Bharti Airtel adds each month in India. And there are already two operators in Bhutan: government-owned Bhutan Telecom Ltd. and private operator Tashi InfoComm Ltd. The country's average revenue per user (ARPU) level is low, and, with teledensity of around 45 percent, there's not much scope for a third operator in the country.

Essentially, this is not the kind of market that would normally interest an operator of Bharti’s size.

The analyst community is a bit flummoxed. "It is not very clear why they would want to enter the Bhutanese market. The only aspect is that they might be looking at increasing their footprint in the region. They are already present in Sri Lanka and recently acquired Warid in Bangladesh," says Neeraj Jain, director of Strategic and Commercial Intelligence Transaction Services at KPMG International .

Bharti has been building up to this, though. In 2009 it built a new terrestrial cable link to Bhutan. The initiative was intended to provide enterprises in Bhutan with access to the world via the link into Bharti's national transport network and then beyond via its international cable landing stations in Chennai and Mumbai.

Bharti Airtel is not known to do business for emotional reasons. Chairman and managing director Sunil Bharti Mittal is an astute businessman and will surely have a business plan up his sleeve.

— Gagandeep Kaur, India Editor, Light Reading

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