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Bharti Airtel -Malawi – dense but attractive
~ Action
Malawi is one of the poorest and most densely populated countries in the world,
relying heavily on foreign aid; yet for telecoms, it appears to be an attractive and
important market for Bharti (6% of earnings). Penetration is low at 20% and Bharti
dominates with a 63% share in this duopoly market. 3G/WiMAX is also being rolled
out, and Bharti is looking to spend US$100mn to further expand coverage over the
next few years. ARPUs are appealing at US$7 currently, but the risk of regulatory
intervention appears to be rising. We expect margins to remain stable in 40% range.
aCatalysts
Operational improvements in Africa and progress on 3G/data would be positive
catalysts. Regulatory risks on MNP, USO and spectrum prices remain.
Anchor themes
The subscriber growth cycle is by no means over, but returns on incremental
subscribers are uncertain. 3G/data should offer further growth opportunities.
Malawi – dense but attractive
c Country overview and competitive landscape
Malawi is one of the smallest and poorest nations, with GDP per
capital of US$909 (PPP). Amongst its 15mn people, wireless
population is low at around 20%, as coverage is limited and around
80% of the population lives in rural areas. Bharti dominates with a
63% share and Telekom Networks Malawi (TNM) has a 37% share.
G-Mobile and Comium both have wireless licences – but no live
services at this stage. Both 3G and WiMAX are available and average
ARPUs are around US$7, we estimate. The lack of domestic and
foreign backhaul is a constraint, which is now being rolled out (funded
by the World Bank). As in Zambia, this market appears to be under
rising regulatory scrutiny – the focus is competition, tariffs and quality
of service.
In the past few months, Bharti appears to have cut peak and off-peak
prices by 20-80%, but these are still high at USc17-33c a minute.
SMS rates are USc6c. Some of the plans/ promos available in Malawi
appear similar to those available in Niger for example, which
highlights that the company may look to extend its best-practices
across its other markets.
d Significance to Bharti
Malawi contributes 4-6% of Bharti’s subscribers/revenues/EBITDA in
Africa and margins are tracking around mid-40%, we estimate. We
don't see significant upside or downside risk to margins at this stage.
Bharti expects to invest over US$100mn in this market over the next
three years to add another 150 towers and expand 3G coverage,
which is currently limited to around 20% of population with an aim to
increase it to around 30%.
Economic overview
Malawi witnessed GDP growth of 7.5% in 2009 and the economy is expected to grow by
6% p.a. in 2010-11F, as per the IMF. The economy is largely dependent upon agriculture
(35% of GDP) and around 80% of the population still resides in rural regions. Malawi is
also reliant on foreign aid – although this has been declining as a proportion of GDP over
the years. Poverty is a key issue in Malawi, with GDP per capita (PPP) one of the lowest
in the continent. Malawi has made some progress in tackling poverty – the government
estimates that poverty headcount has fallen from 52% in 2005 to 40% in 2009. However,
progress in areas of education, gender equality, improving maternal health has been
limited. HIV/AIDS is a key issue in this country (12% of population are estimated to be
positive), and a programme to tackle this problem was initiated in 2004.
Key political facts
Malawi saw its first democratic elections in 1994. The recent May 2009 presidential
and parliamentary elections were viewed as peaceful giving President Bingu wa
Mutharika and the Democratic Progressive Party (DPP) a mandate for the second term.
The majority enjoyed by DPP allowed it to pass the 2009/10 national budget as well as
several bills pushed forward from its previous tenure. However, the President has also
passed some bills which allow him to: 1) decide the time of next elections and 2) also
allow him to fire the Vice President, which are deemed controversial.
(Source: African Economic Outlook - http://www.africaneconomicoutlook.org and BBC
Country profile)
Telecom landscape
z Despite its small land size relative to other African markets, Malawi has a
population of 15mn with wireless penetration at around 20% on our estimates. Zain
last reported ARPUs of around US$8, and we estimate these are now around US$7.
z Mobile: The market has only two operational mobile players – Bharti with a share
of 63% and Telekom Networks Malawi (TNM, which is the mobile arm of incumbent
fixed line player MTL) with 37%. G-Mobile was awarded a 3rd mobile licence but is
yet to launch services. A 4th licence was issued in December 2010 to Comium
Malawi with a view to increase competition in this market. Comium Group is a
Lebanese firm with telecom interests in nine African markets.
z Fixed-line: The fixed line space has seen some liberalization as well – the
incumbent was privatised in 2006 and in 2008, a second player, Access
Communications (ACL), was awarded a licence; ACL offers services on
CDMA2000.
z 3G/broadband/Internet: 3G was launched by both Bharti and TNM in 2010. There
are around 15 ISPs in the country, but high bandwidth costs have remained a
hurdle for growth. A national fibre optic backbone is being implemented as is
connectivity to international bandwidth under the World Bank funded regional
communications infrastructure programme (RCIP), which should allow it to reduce
traffic costs.
z Several ISPs are now rolling out WiMAX. Broadband is also available from EV-DO
networks of MTL and ACL.
z Regulations: Based on some of the statements made by the regulator at the start
of 2010, it appears that the Malawian telecom market could undergo some
regulatory overhaul. Areas that have been highlighted include: 1) an overall review
of regulatory framework; 2) competition; 3) tariff regulation; 4) quality of service;
and 5) ensuring rollout obligations are met etc. The regulator has acted on several
of these including the issue of a 4th licence, publication of quarterly QoS reports.
Interconnect regime has also been recently changed we understand. Although we
are unable to verify progress on some aspects, we believe regulatory risks remain
to the upside in this market.
Competition
z The mobile market in Malawi has largely been a duopoly with Bharti dominating the
market with a 63% share, we estimate. TNM has the remaining share of 37%.
z The regulator has noted the need for the introduction of more operators to increase
competition, bring tariffs down and also improve quality of service. The fourth
mobile licence was issued in 2010 to Comium Malawai of the Lebanese Comium
group. (C-Mobile finally gets Malawi’s fourth mobile licence, 5th December 2010,
malawi.world-countries.net)
z The regulator issued a third licence to G-Mobile (Globally Advanced Integrated
Mobile Networks Limited) in 2009. However, we understand G-Mobile has failed to
meet the rollout obligations. In Sep-2010, the regulator made a move to revoke the
licence issued to G-Mobile due to this; however, we understand the court has
prevented the regulator from revoking l icences. G-Mobile is expected to launch
services in June 2011. (G-Mobile ‘can’t believe’ Vuwa’s gripe, mulls suing, the
Maravi Post, 11th January 2011).
Bharti’s price initiatives in Malawi
z Tariff reductions: In October 2010, Bharti launched a unified prepaid plan
“Chezani” – offering discounts of 22% in peak hours (from standard rate of K51 per
minute or USc33) and as much as 80% in off-peak hours (from standard rate of
K26 per minute or USc17). SMS rates were also reduced by 38% from K16 to K10
(USc6). (Zain cuts tariff by 56%, to erect 150 towers, The Nation , 13th Oct 2010)
z Reduction in price of SIM cards: The cost of SIM cards have also been reduce d
twice – from K390 (US$2.5) to K250 (US$1.7), which was further cut to K150
(US$1). (Zain Malawi reduces service, product charges, bizcommunity.com, 31st Aug 2010).
z Money back offer on Ultra low cost handsets: Similar to Niger, Bharti also has a
‘get a free mobile phone’ promo – basically a money back offer, which credits the
cost of the phone as airtime – and thereby, allowing subscribers an opportunity to
own an Ultra Low Cost Handset (ULCH). We understand Huawei may be the
supplier for these phones (Zain Malawi to connect telecom services to rural areas
by 2013, Digital Journal, 28th Oct 2010)
z Free access to certain websites: Bharti following launch of 3G allows for free
access to some websites such as BBC, Twitter, Facebook, we understand. (Mobile
users welcome 3G in Malawi , bizcommuni ty.com, 1st Oct 2010).
Significance to Bharti
z Malawi contributes 4-6% of Bharti’s subscribers/revenues/EBITDA in Africa. From a
competitive standpoint, this should be a relatively easier market – Bharti is the
leader with 63% and there are only two operational players currently. Bharti’s
margins have been in the mid-to-high-40’s in the past, and we expect the company
to maintain these at around 40% levels.
z Bharti expects to invest over US$100mn in this market over the next three years;
included in its expansion plan are: 1) addition of another 150 towers in the next 12-
months; and 2) expansion of 3G coverage. Bharti also intends to double its
coverage in terms of number of towers by 2013. (Zain Malawi to connect telecom
services to rural areas by 2013, Digital Journal, 28th Oct 2010; Zain cuts tariff by
56%, to erect 150 towers, The Nation , 13th Oct 2010) )
z Bharti launched 3G in Oct 2010. We understand 3G coverage at the time of launch
was at 21% of its existing market coverage, (77 out of 360 towers) and Bharti had
targeted to expand this to 30% of its network by end of year. (Mobile users
welcome 3G in Malawi , bizcommuni ty.com, 1st Oct 2010).
About TNM and MTL …
z MTL is the incumbent fixed line operator in Malawi. 2006 saw the privatisation of
the state-owned operator with the government selling an 80% stake to Telecom
Holdings Limited, which was a consortium of Malawian investors. The government
owns 20% of MTL. MTL in turn owns 40% of the mobile player TNM and
indigenous Malawian investors trading as MTL Mobile own the remaining 60%.
(Company website)
z We estimate TNM has roughly a 37% share in the wireless market. TNM launched
3G in March 2010 with services such as video calling and mobile broadband. The
company in its recent earnings release notes that it intends to expand 3.5G mobile
broadband services to all major urban areas in the near term. TNM also has been
offering subsidised low cost handsets to increases subscriber uptake. (TNM Malawi
launches 3G services, Wireless Federation, 17 th March 2010)
Regulatory overview
The Board Chairman, in MACRA’s publication Scale (Vol 2 Issue 2, March 2010)
highlighted several areas of work. We highlight the same here, although progress on
some of the aspects highlighted here hasn’t been verified.
z Review of Communication Act of 1998: The regulator began a review of the
Communication Act No. 41 of 1998. MACRA notes that this is an “on-going”
process and the regulator has received feedback through consultations with various
stakeholders. The aim of this review is to make sure the regulatory framework is
conducive at all times to all stakeholders. (Scale, Vol 2 Issue 2, published by
MACRA).
z Tariff regulation: MACRA’s website notes that tariff regulation forms part of the
core mandate of the Authority. In an interview, the Director General notes that,
despite MACRA’s empowerment in this area, they enforcement hasn’t been
forthcoming and hence operators haven’t really offered reasonable tariffs. Towards
this direction the regulator subsequently licensed a 4th operator and interconnect
was also reviewed, we understand. (Scale, Vol 2 Issue 2, published by MACRA).
z New interconnect regime – Sender Keeps All:
− We understand the previous interconnects allows operators to charge USc4 for
interconnection – this was established in 2004 by MACRA and valid for
12months until operators could mutually decide on suitable rates.
− MACRA then proposed the new interconnection law called “Sender Keeps All”
(SKA) – basically allowing the operator from whose network the call is
originating to keep all revenues. We are not clear when this was introduced.
− Subsequently, Bharti (Celtel at that time) and TNM obtained an injunction
against the SKA regime; but more recently, this has been overruled as of Dec-
2010. MACRA expects that operators could likely comply with this ruling and
adopt this regime. (Injunction lifted on MACRA interconnection law, 10th Jan
2011, bizcommunity.com; Court rules for MACRA in interconnection dispute
(Malawi), 12 th Jan 2011, Wireless Federation).
z Change in currency for tariff plans: AS of 1st August 2010, the telcos were asked
to charge subscribers in the local currency vs charging in US$ as they were
previously doing.
z The Universal Access Pilot Project was launched in September, 2009. The aim
is to provide basic ICT services to the rural and underserved areas of Malawi, by
establishing Internet and telephony services in five development corridors. (Scale,
Vol 2 Issue 2, published by MACRA)
z Licence revision to include penalty for failure to meet rollout obligations:
MACRA was also in the process of revising operators’ licences to include penalties
for 1) failure to roll out services in given areas, 2) failure to roll out after the
issuance of a new licence and 3) offering poor service. Scale, Vol 2 Issue 2,
published by MACRA)
z Quality of service: The regulator notes that ensuring service quality is a priority.
To this end, MACRA publishes QoS reports on a quarterly basis; although it is not
clear if penalties have been implemented. Scale, Vol 2 Issue 2, published by
MACRA)
Exhibit 9. The authorities
Regulator Malawi Communications Regulatory Authority (MACRA) http://www.macra.org.mw/
Source: Nomura research
Valuation: Our DCF-based price target for Bharti is based on a WACC of 9% and a
terminal growth rate of 3%.
Risks to our price target include stronger-than-expected competition and
unfavourable regulatory developments related to various fees and charges. Upside
risks include benign competition and faster-than-anticipated stability in pricing.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Bharti Airtel -Malawi – dense but attractive
~ Action
Malawi is one of the poorest and most densely populated countries in the world,
relying heavily on foreign aid; yet for telecoms, it appears to be an attractive and
important market for Bharti (6% of earnings). Penetration is low at 20% and Bharti
dominates with a 63% share in this duopoly market. 3G/WiMAX is also being rolled
out, and Bharti is looking to spend US$100mn to further expand coverage over the
next few years. ARPUs are appealing at US$7 currently, but the risk of regulatory
intervention appears to be rising. We expect margins to remain stable in 40% range.
aCatalysts
Operational improvements in Africa and progress on 3G/data would be positive
catalysts. Regulatory risks on MNP, USO and spectrum prices remain.
Anchor themes
The subscriber growth cycle is by no means over, but returns on incremental
subscribers are uncertain. 3G/data should offer further growth opportunities.
Malawi – dense but attractive
c Country overview and competitive landscape
Malawi is one of the smallest and poorest nations, with GDP per
capital of US$909 (PPP). Amongst its 15mn people, wireless
population is low at around 20%, as coverage is limited and around
80% of the population lives in rural areas. Bharti dominates with a
63% share and Telekom Networks Malawi (TNM) has a 37% share.
G-Mobile and Comium both have wireless licences – but no live
services at this stage. Both 3G and WiMAX are available and average
ARPUs are around US$7, we estimate. The lack of domestic and
foreign backhaul is a constraint, which is now being rolled out (funded
by the World Bank). As in Zambia, this market appears to be under
rising regulatory scrutiny – the focus is competition, tariffs and quality
of service.
In the past few months, Bharti appears to have cut peak and off-peak
prices by 20-80%, but these are still high at USc17-33c a minute.
SMS rates are USc6c. Some of the plans/ promos available in Malawi
appear similar to those available in Niger for example, which
highlights that the company may look to extend its best-practices
across its other markets.
d Significance to Bharti
Malawi contributes 4-6% of Bharti’s subscribers/revenues/EBITDA in
Africa and margins are tracking around mid-40%, we estimate. We
don't see significant upside or downside risk to margins at this stage.
Bharti expects to invest over US$100mn in this market over the next
three years to add another 150 towers and expand 3G coverage,
which is currently limited to around 20% of population with an aim to
increase it to around 30%.
Economic overview
Malawi witnessed GDP growth of 7.5% in 2009 and the economy is expected to grow by
6% p.a. in 2010-11F, as per the IMF. The economy is largely dependent upon agriculture
(35% of GDP) and around 80% of the population still resides in rural regions. Malawi is
also reliant on foreign aid – although this has been declining as a proportion of GDP over
the years. Poverty is a key issue in Malawi, with GDP per capita (PPP) one of the lowest
in the continent. Malawi has made some progress in tackling poverty – the government
estimates that poverty headcount has fallen from 52% in 2005 to 40% in 2009. However,
progress in areas of education, gender equality, improving maternal health has been
limited. HIV/AIDS is a key issue in this country (12% of population are estimated to be
positive), and a programme to tackle this problem was initiated in 2004.
Key political facts
Malawi saw its first democratic elections in 1994. The recent May 2009 presidential
and parliamentary elections were viewed as peaceful giving President Bingu wa
Mutharika and the Democratic Progressive Party (DPP) a mandate for the second term.
The majority enjoyed by DPP allowed it to pass the 2009/10 national budget as well as
several bills pushed forward from its previous tenure. However, the President has also
passed some bills which allow him to: 1) decide the time of next elections and 2) also
allow him to fire the Vice President, which are deemed controversial.
(Source: African Economic Outlook - http://www.africaneconomicoutlook.org and BBC
Country profile)
Telecom landscape
z Despite its small land size relative to other African markets, Malawi has a
population of 15mn with wireless penetration at around 20% on our estimates. Zain
last reported ARPUs of around US$8, and we estimate these are now around US$7.
z Mobile: The market has only two operational mobile players – Bharti with a share
of 63% and Telekom Networks Malawi (TNM, which is the mobile arm of incumbent
fixed line player MTL) with 37%. G-Mobile was awarded a 3rd mobile licence but is
yet to launch services. A 4th licence was issued in December 2010 to Comium
Malawi with a view to increase competition in this market. Comium Group is a
Lebanese firm with telecom interests in nine African markets.
z Fixed-line: The fixed line space has seen some liberalization as well – the
incumbent was privatised in 2006 and in 2008, a second player, Access
Communications (ACL), was awarded a licence; ACL offers services on
CDMA2000.
z 3G/broadband/Internet: 3G was launched by both Bharti and TNM in 2010. There
are around 15 ISPs in the country, but high bandwidth costs have remained a
hurdle for growth. A national fibre optic backbone is being implemented as is
connectivity to international bandwidth under the World Bank funded regional
communications infrastructure programme (RCIP), which should allow it to reduce
traffic costs.
z Several ISPs are now rolling out WiMAX. Broadband is also available from EV-DO
networks of MTL and ACL.
z Regulations: Based on some of the statements made by the regulator at the start
of 2010, it appears that the Malawian telecom market could undergo some
regulatory overhaul. Areas that have been highlighted include: 1) an overall review
of regulatory framework; 2) competition; 3) tariff regulation; 4) quality of service;
and 5) ensuring rollout obligations are met etc. The regulator has acted on several
of these including the issue of a 4th licence, publication of quarterly QoS reports.
Interconnect regime has also been recently changed we understand. Although we
are unable to verify progress on some aspects, we believe regulatory risks remain
to the upside in this market.
Competition
z The mobile market in Malawi has largely been a duopoly with Bharti dominating the
market with a 63% share, we estimate. TNM has the remaining share of 37%.
z The regulator has noted the need for the introduction of more operators to increase
competition, bring tariffs down and also improve quality of service. The fourth
mobile licence was issued in 2010 to Comium Malawai of the Lebanese Comium
group. (C-Mobile finally gets Malawi’s fourth mobile licence, 5th December 2010,
malawi.world-countries.net)
z The regulator issued a third licence to G-Mobile (Globally Advanced Integrated
Mobile Networks Limited) in 2009. However, we understand G-Mobile has failed to
meet the rollout obligations. In Sep-2010, the regulator made a move to revoke the
licence issued to G-Mobile due to this; however, we understand the court has
prevented the regulator from revoking l icences. G-Mobile is expected to launch
services in June 2011. (G-Mobile ‘can’t believe’ Vuwa’s gripe, mulls suing, the
Maravi Post, 11th January 2011).
Bharti’s price initiatives in Malawi
z Tariff reductions: In October 2010, Bharti launched a unified prepaid plan
“Chezani” – offering discounts of 22% in peak hours (from standard rate of K51 per
minute or USc33) and as much as 80% in off-peak hours (from standard rate of
K26 per minute or USc17). SMS rates were also reduced by 38% from K16 to K10
(USc6). (Zain cuts tariff by 56%, to erect 150 towers, The Nation , 13th Oct 2010)
z Reduction in price of SIM cards: The cost of SIM cards have also been reduce d
twice – from K390 (US$2.5) to K250 (US$1.7), which was further cut to K150
(US$1). (Zain Malawi reduces service, product charges, bizcommunity.com, 31st Aug 2010).
z Money back offer on Ultra low cost handsets: Similar to Niger, Bharti also has a
‘get a free mobile phone’ promo – basically a money back offer, which credits the
cost of the phone as airtime – and thereby, allowing subscribers an opportunity to
own an Ultra Low Cost Handset (ULCH). We understand Huawei may be the
supplier for these phones (Zain Malawi to connect telecom services to rural areas
by 2013, Digital Journal, 28th Oct 2010)
z Free access to certain websites: Bharti following launch of 3G allows for free
access to some websites such as BBC, Twitter, Facebook, we understand. (Mobile
users welcome 3G in Malawi , bizcommuni ty.com, 1st Oct 2010).
z Malawi contributes 4-6% of Bharti’s subscribers/revenues/EBITDA in Africa. From a
competitive standpoint, this should be a relatively easier market – Bharti is the
leader with 63% and there are only two operational players currently. Bharti’s
margins have been in the mid-to-high-40’s in the past, and we expect the company
to maintain these at around 40% levels.
z Bharti expects to invest over US$100mn in this market over the next three years;
included in its expansion plan are: 1) addition of another 150 towers in the next 12-
months; and 2) expansion of 3G coverage. Bharti also intends to double its
coverage in terms of number of towers by 2013. (Zain Malawi to connect telecom
services to rural areas by 2013, Digital Journal, 28th Oct 2010; Zain cuts tariff by
56%, to erect 150 towers, The Nation , 13th Oct 2010) )
z Bharti launched 3G in Oct 2010. We understand 3G coverage at the time of launch
was at 21% of its existing market coverage, (77 out of 360 towers) and Bharti had
targeted to expand this to 30% of its network by end of year. (Mobile users
welcome 3G in Malawi , bizcommuni ty.com, 1st Oct 2010).
About TNM and MTL …
z MTL is the incumbent fixed line operator in Malawi. 2006 saw the privatisation of
the state-owned operator with the government selling an 80% stake to Telecom
Holdings Limited, which was a consortium of Malawian investors. The government
owns 20% of MTL. MTL in turn owns 40% of the mobile player TNM and
indigenous Malawian investors trading as MTL Mobile own the remaining 60%.
(Company website)
z We estimate TNM has roughly a 37% share in the wireless market. TNM launched
3G in March 2010 with services such as video calling and mobile broadband. The
company in its recent earnings release notes that it intends to expand 3.5G mobile
broadband services to all major urban areas in the near term. TNM also has been
offering subsidised low cost handsets to increases subscriber uptake. (TNM Malawi
launches 3G services, Wireless Federation, 17 th March 2010)
Regulatory overview
The Board Chairman, in MACRA’s publication Scale (Vol 2 Issue 2, March 2010)
highlighted several areas of work. We highlight the same here, although progress on
some of the aspects highlighted here hasn’t been verified.
z Review of Communication Act of 1998: The regulator began a review of the
Communication Act No. 41 of 1998. MACRA notes that this is an “on-going”
process and the regulator has received feedback through consultations with various
stakeholders. The aim of this review is to make sure the regulatory framework is
conducive at all times to all stakeholders. (Scale, Vol 2 Issue 2, published by
MACRA).
z Tariff regulation: MACRA’s website notes that tariff regulation forms part of the
core mandate of the Authority. In an interview, the Director General notes that,
despite MACRA’s empowerment in this area, they enforcement hasn’t been
forthcoming and hence operators haven’t really offered reasonable tariffs. Towards
this direction the regulator subsequently licensed a 4th operator and interconnect
was also reviewed, we understand. (Scale, Vol 2 Issue 2, published by MACRA).
z New interconnect regime – Sender Keeps All:
− We understand the previous interconnects allows operators to charge USc4 for
interconnection – this was established in 2004 by MACRA and valid for
12months until operators could mutually decide on suitable rates.
− MACRA then proposed the new interconnection law called “Sender Keeps All”
(SKA) – basically allowing the operator from whose network the call is
originating to keep all revenues. We are not clear when this was introduced.
− Subsequently, Bharti (Celtel at that time) and TNM obtained an injunction
against the SKA regime; but more recently, this has been overruled as of Dec-
2010. MACRA expects that operators could likely comply with this ruling and
adopt this regime. (Injunction lifted on MACRA interconnection law, 10th Jan
2011, bizcommunity.com; Court rules for MACRA in interconnection dispute
(Malawi), 12 th Jan 2011, Wireless Federation).
z Change in currency for tariff plans: AS of 1st August 2010, the telcos were asked
to charge subscribers in the local currency vs charging in US$ as they were
previously doing.
z The Universal Access Pilot Project was launched in September, 2009. The aim
is to provide basic ICT services to the rural and underserved areas of Malawi, by
establishing Internet and telephony services in five development corridors. (Scale,
Vol 2 Issue 2, published by MACRA)
z Licence revision to include penalty for failure to meet rollout obligations:
MACRA was also in the process of revising operators’ licences to include penalties
for 1) failure to roll out services in given areas, 2) failure to roll out after the
issuance of a new licence and 3) offering poor service. Scale, Vol 2 Issue 2,
published by MACRA)
z Quality of service: The regulator notes that ensuring service quality is a priority.
To this end, MACRA publishes QoS reports on a quarterly basis; although it is not
clear if penalties have been implemented. Scale, Vol 2 Issue 2, published by
MACRA)
Exhibit 9. The authorities
Regulator Malawi Communications Regulatory Authority (MACRA) http://www.macra.org.mw/
Source: Nomura research
Valuation: Our DCF-based price target for Bharti is based on a WACC of 9% and a
terminal growth rate of 3%.
Risks to our price target include stronger-than-expected competition and
unfavourable regulatory developments related to various fees and charges. Upside
risks include benign competition and faster-than-anticipated stability in pricing.
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