By IANS,
Dubai : India’s leading telecom company Bharti Airtel will sign the final agreement Tuesday with Kuwait’s Zain to buy its African assets, other than those in Morocco and Sudan, for $10.7 billion, reports a Kuwaiti newspaper.
“Zain’s Chairman Asaad Al Banwan and Chief Executive Officer Nabil bin Salama fly to Amsterdam Monday to attend the ceremony of signing the final contract that will be held on Tuesday at the Zain Africa headquarters,” said ‘Al-Watan’, citing unnamed sources.
“The ceremony will be attended by Bharti CEO Sunil Bharti Mittal and other senior officials,” it said.
According to the report, sources mentioned that the Zain chairman and CEO will return “as soon as the agreement is signed to hold a board meeting on Wednesday so as to approve the annual financial results of the company and to recommend the distribution of the 2009 profits.”
“Sources overruled any contradiction between the board’s approach and the statements made by the chairman, who lauded the transferring of the assets of the sold company to Bharti, saying that such a deal can take up to two to three weeks after signing the deal,” the report said.
Based on regulatory approvals, Bharti will pay $9 billion to acquire Zain’s assets spread across 15 African countries. It will also adopt $1.7 billion of Zain’s debt. Bharti has already tied up $.8.3 billion to fund the acquisition.
This has been Bharti’s third attempt to enter the largely untapped African market after failing to enter into a merger pact with South Africa’s MTN on two occasions. Africa accounts a little over 60 percent of Zain’s 71.8 million customers.
Bharti Airtel is among Asia’s leading telecom service providers with operations now in India, Sri Lanka and Bangladesh. As on Jan 31, it had the largest market share of 23.33 percent in India’s mobile telephony segment with 121.71 million subscribers.
The Indian firm is currently the 10th biggest player in the global mobile phone service business, compared to Zain’s 20th rank. Post acquisition of Zain’s African assets, it is set to climb three places to the 7th position.
Some of the highlights of the deal with Zain are:
– Offer of $10.7 billion for Zain’s assets
– Deal excludes Zain’s operations in Morocco and Sudan
– Zain has over 71.8 million customers in 23 countries
– In the Middle East, it has 29.9 million and in Africa 41.9 million customers
– Zain is listed on Kuwait Stock Exchange with 100 percent free float
– Its largest shareholder is Kuwait Investment Authority with 24.6 percent
– The company’s consolidated revenue amounted to $6.1 billion last year
Bharti Airtel, which has been on the lookout for an overseas acquisition for over two years now, said last month that it would acquire a 70 percent controlling stake in the Bangladesh-based Warid Telecom to expand its global footprint.
The company had late last year failed to strike a deal for the second time with MTN.
The MTN deal, worth some $24 billion in cash and equity, envisaged Bharti getting a 49-percent stake in MTN, and the South African firm and its shareholders 36 percent equity in the Indian telecom major. But it got stuck over policy issues.
Now, MTN will be a major competitor in the territories the Indian company is entering.