Bharti completes Zain Africa deal

Bharti expands its footprint to 18 countries with a combined population of 1.8 billion people

Tags: Bharti AirtelMergers and acquisitionsZain Group (www.zain.com)
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Bharti completes Zain Africa deal Bharti Airtel is now among the world's five biggest mobile operators. (Getty Images)
By  Roger Field Published  June 9, 2010

India's biggest mobile operator, Bharti Airtel, has completed its acquisition of 15 of Zain Group's African mobile operations for $10.7 billion.

The deal, which leaves Zain Group with just two operations in Africa, gives Bharti an international footprint covering 1.8 billion people across 18 countries, and increases the company's customer base to some 180 million.

The deal, which is the largest ever cross-border deal in emerging markets, will give the combined group revenues of more than $12.4 billion and places Bharti among the five largest mobile operators in the world.

As part of the deal, Bharti has the right to operate its African assets under the Zain brand for an undisclosed period.

Sunil Bharti Mittal, chairman and managing director, Bharti, said the deal would further strengthen "the historic Indo-Africa economic and social ties".

"Bharti, which has been working towards its vision of expansion into Africa, is committed to contributing to the growth of telecom in the region by taking networks deep into these countries," he said.

Zain confirmed that it had received $$7.868 billion in cash from Bharti and said that it expected to receive up to an additional US$400 million in the next six months, depending on "certain milestones being achieved."

The balance of US$700 million is due one year from completion of the deal, according to the original agreement signed on March 30, 2010.

Asaad Al Banwan, chairman of the board of directors of Zain, said the deal demonstrated the "significant value" the company had created for its shareholders over the last five years. "The board of directors will consider the best use of the remaining proceeds to further enhance value for all stakeholders," he added.

Zain said it had also repaid the US$4 billion revolving credit facility which it entered into in July 2006. The telco intends to use the remaining proceeds to pay dividends and "other corporate matters."

The African assets acquired by Bharti cover 15 countries with a total customer base of more than 42 million. The total population base covered is more 450 million people, with telecom penetration of about 32%.

The countries in which Bharti has acquired the operations are: Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda, and Zambia. Zain is the market leader in 10 of the 15 countries and second in four countries.

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