Bharti-Zain deal likely to be sealed tomorrow
Bharti Airtel, India’s largest telecom service provider, and Kuwait-based Zain are set to announce closure of the deal under which Bharti Airtel has proposed buying Zain’s Africa operations, excluding Morocco and Sudan, for $10.7 billion (Rs 49,000 crore).business Updated: Mar 23, 2010 20:57 IST
Bharti Airtel, India’s largest telecom service provider, and Kuwait-based Zain are set to announce closure of the deal under which Bharti Airtel has proposed buying Zain’s Africa operations, excluding Morocco and Sudan, for $10.7 billion (Rs 49,000 crore).
“Everything is moving in the right direction and the closure of the deal will be announced on March 25,” said a source involved in the deal.
The past few days have seen senior officials of Bharti Airtel meet until late evening in New Delhi to finalise the nitty-gritty of the deal.
In its board meeting on Wednesday, Zain — owned by Mobile Telecommunications Co — is likely to approve the Bharti proposal, said the source. Once the Zain board approves the deal, the company will have to inform it to the stock markets within 48 hours.
The final agreement and change of management will take a few more weeks.
A Bharti Airtel spokesperson declined to comment.
Of the $10.7 billion, Bharti will pay $9 billion (Rs 41,500 crore) to Zain; the balance $1.7 billion (Rs 7,800 crore) is debt. Further, Bharti will have to pay $700 million (Rs 3,200 crore) to Zain, one year after deal closure.
That leaves the company with a payment obligation of $8.3 billion (Rs 38,000 crore). Of this, $7.5 billion (Rs 34,500 crore) is being arranged by Standard Chartered Bank, Barclays and State Bank of India.
On its part, Zain is desperate to sell its Africa operations, which is drain on its resources. In Africa, the company has average revenue per user (ARPU) of about $6 (Rs 276) per month compared to South Africa-based MTN’s ARPU of $8 (Rs 368).
In September, Vavasi, an Indian telecom company, and Al Bukhary, a Malaysian business group, entered into a deal with the Kharafi family to buy a controlling stake in Zain. However, the deal could not materialise.
Bharti has been keen on entering African market. In the past two years, it has twice attempted a merger with South Africa-based MTN.