Bharti Airtel undertakes investment of $10.7 billion to acquire Zain's African operations

India’s biggest telecoms company, Bharti Airtel, has concluded a deal for the acquisition of Kuwaiti mobile operator, Zain. The investment deal ranks amongst the biggest cross-border deals in Indian history and is going to cost Bharti Airtel $10.7 billion. The company now takes over the assets of Zain Africa, the Kuwaiti mobile firm’s Africa operations.


During the announcement of the acquisition yesterday, Bharti Airtel reiterated that the deal is expected to peg its customer numbers at more than 180 million people and hopes for resultant cumulative combined revenue of more than $12.4 billion. If that should happen, Bharti Airtel will be propelled within the ranks of Global top five telecom companies.


Bharti Airtel will take over Zain Africa’s operations in the fifteen African countries the Kuwaiti telecom firm formerly operated in. Bharti has acquired Zain's operations in Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia.


Bharti Chairman was elated at the closure of the transformation deal that he termed “for India and Bharti”. The company had been trying to imitate its low cost business model overseas as it faces falling market share and declining revenues back in India. On the other hand for Zain, officially known as “Mobile Telecommunications Company”, this deal is expected to further the expansion of the company that was begun by its expelled head, Saad al-Barak. 


Bharti Airtel said this deal is significant as it seeks to achieve its ambitions expansion plans into global markets outside of India. But the company’s challenge lies in integrating the operations of its new acquisition, Zain Africa in all 15 countries, which currently, to a large extent, operate as stand alone units, reported industry analysts.


Zain Africa reported Tuesday that Bharti had paid it $7.9 billion in cash and over the next six months, the company expects to get additional sums of $400 million, upon milestones being achieved, and the remaining $700 million will be paid a year from completion of the acquisition, the company said.


Under the agreement, Bharti will assume about $1.7 billion of consolidated debt obligations. Bharti Airtel made this huge payout in the wake of an additional $2.6 billion it paid the Indian government in May for 3G spectrum in a recently concluded auction. However, the agreement covers Zain’s operations in the mentioned African countries except its operations in Sudan and its investments in Morocco.


June 10, 2010.