Bharti announces closure of Zain deal

| June 8, 2010 | 1 Comment

Bharti Airtel and Kuwait’s Zain closed a $10.7 billion deal in which the Indian telecom major will buy most of the Kuwaiti firm’s African assets.

In the largest ever telecom takeover by an Indian firm, Bharti Airtel had in March signed a deal with Kuwait-based to buy its African business for $10.7 billion (about Rs 48,000 crore).

Announcing the deal, Sunil Mittal had said, ""This transaction is a pioneering step towards South-South cooperation and strengthening of ties between India and Africa. With this acquisition, Bharti Airtel will be transformed into a truly global telecom company with operations across 18 countries fulfilling our vision of building a world-class multinational.”

The acquisition, the second largest by an Indian entity after Tatas’ Corus deal, would make Sunil Mittal-led Bharti the world’s seventh largest mobile operator with a total subscriber base of about 179 million. It would have estimated revenues of $13 billion.

With this, Bharti has fulfilled its ambition of entering Africa, where it failed twice in the last two years to forge a $23 billion merger deal with South African telecom giant MTN. Zain has operations in 17 African countries and Bharti has acquired all, but those in Sudan and Morocco.

The African business would widen Bharti’s reach, which was hitherto restricted to Asia and Indian Ocean region with businesses in Sri Lanka, Bangladesh and Seychelles.  Of the $10.7 billion enterprise value of Zain, Bharti will be paying $8.3 billion upfront and $700 million after a year. It would also take over approximately $1.7 billion of Zain’s debts as on December 31, 2009.

Of the $8.3 billion paid to Zain, Bharti has raised the debt from a consortium of foreign banks and State Bank of India with the lead-arranger and lead-advisor Standard Chartered Bank committing the highest amount — $1.3 billion followed by $0.9 billion by Barclays.

Source : NDTV Profit

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