By Standard Reporter and Reuters
Zain’s ill-fated adventure in Africa is virtually over after its board approved the sale of most of its assets on the continent to India’s Bharti Airtel for $9 billion (Sh693 billion under current exchange rates), sources said.
Sale documents in the deal, which marks Bharti’s third attempt to acquire a substantial presence in Africa, will be signed within several days, two sources with direct knowledge of the matter said yesterday.
"It’s good for Africa, it’s good for African mobile, it’s good for African consumers, and it’s good for Bharti’s shareholders also," said Michael Kovacocy, a London-based telecoms analyst at Daiwa Securities.
"Many African countries have low GDP per capita. The ability to run an operation on a shoestring is a valued commodity," he said.
Bharti, which failed twice to acquire Africa’s biggest mobile operator MTN Group, is desperate to expand in new markets as cut-rate competition in its home market — the world’s fastest growing —squeezes margins and clouds its growth outlook. Bharti has thrived in an Indian market with low incomes and tariffs and a heavily rural population — characteristics shared by African nations.
Zain was keen to lock in what many regard as a high price offered by Bharti. The Kuwaiti group pulled back from an expansion spree last year and rejected an offer from France’s Vivendi for its African assets.
"They’ve paid a premium for those assets but it could be argued they can extract much more value than the seller of those assets could," Kovacocy said.
Due diligence on the deal, which will extend Bharti Airtel’s reach into 15 African emerging markets, is complete, the sources said.
Spokesmen for Zain and Bharti declined to comment. Bharti, 32-per cent owned by Singapore Telecommunications (STEL.SI), would pay a total of $9 billion in cash to Zain, including $700 million to be paid one year after the deal closes. The Indian firm will also assume $1.7 billion debt on the target firm’s books.
— Reuters
