Bharti Airtel Ltd on Tuesday acquired the Africa operations of Kuwait-based Mobile Telecommunications Co KSC, which owns the Zain brand, in 15 countries at an enterprise value of $10.7 billion (Rs 50,800 crore).
<b1>With this, India’s largest telecom service provider becomes the world’s fifth largest, after China Mobile, Vodafone, Telefonica and American Movil.
“Zain Africa will now be 100 per cent subsidiary of Bharti International,” said Sunil Bharti Mittal, Chairman and Managing Director of Bharti Airtel.
“We will launch the Airtel brand in Africa in October,” said Manoj Kohli, CEO (International) Bharti Airtel.
“About 40-50 people from India will be moving to Africa and 20-25 people from Africa to India.” Based on the last audited results, the combined entity will have revenues of $12.4 billion (Rs 58,280 cr) and operating profits of $4.7 billion (Rs 22,090 cr).
Bharti has also sorted out long-standing litigation between Zain Africa and its Nigerian partner Broad Communications Group. Oba Otudeko has been appointed chairman of the company in Nigeria, Africa’s largest market. Bharti’s Africa operations will be headquartered in Nairobi, Kenya.
Bharti had earlier tried to merge with South Africa-based MTN. “There were compromises to be made (in MTN),” said Mittal. “Zain is the second-largest operator and that is the only difference. But we will have full control and our own brand. We are fortunate that we got the second chance (through Zain) and got much better deal.”
This is the second-largest overseas acquisition by an Indian company, after Tata Steel purchased Corus Group for $12.2 billion (Rs 57,340 cr) in all cash deal in January 2007.
Bharti has paid $7.9 billion (Rs 37,130 cr) to Zain. The balance $400 million (Rs 1,880 cr) from the total upfront payment would be made in a few days on completion of formalities. The remaining $ 700 million (Rs 3,290 cr) would be paid after a year. Bharti has also taken over $1.7 billion (Rs 7,990 cr) of Zain’s debts as on December 31, 2009.