Indications emerged yesterday that Indian-based telecom operator, Bharti Airtel, has completed the $10.7 billion acquisition of African operations of Zain.
Bharti struck the deal with Zain last March but was reported to have needed to tie other nuts of the deal necessary to finally consummate the buy-over.
With the completion of the sales, Bharti becomes a proud owner of Zains mobile operations in 15 African countries, including Nigeria.
The deal is exciting Bharti owners who have described it as India’s second biggest overseas acquisition after Tata Steel’s $13 billion buy of Corus in 2007.
In a statement, made available to Vanguard, Bharti said: “further to the announcement on the closure of Zain Africa deal, we are pleased to announce a significant development in Nigeria.
“The long-standing disputes on multiple fronts by our main local partner, Broad Communications Group and its affiliates, owned, controlled and managed by Mr. Oba Otudeko and his family have been satisfactorily settled. Mr. Otudeko will also be appointed as the Chairman of our company in Nigeria. This paves the way for the aggressive development of our business in Nigeria, one of the largest growth markets in the world. Mr. Otudeko, who is a highly regarded business leader in Nigeria, will bring all his resources to make us a leader in mobile telephony in Nigeria.”
Bharti, arguably the Indian telecom market leader is facing ferocious competition at home and now is believing that opportunities in Africa are worth the risks.
Vanguard gathered that the main acquisition is valued at $9 billion but if the $1.7billion debt Bharti agreed to inherit from Zain is added, it brings the total value of the business deal to about $10.7billion.
The deal, which is expected to lift the company’s subscriber base to 180 million from 18 countries, however brings tough financial and management challenges for Bharti, a company scrambling to defend its lead in a fiercely competitive home market.
Nigerian subscribers who express mixed feelings over the sale are expecting Bharti to streamline operations across 15 different countries in Africa, raising revenue and turning around the loss-making assets.
The Zain deal with Bharti had suffered different strokes of set backs since it was initiated some few months ago. The government of central African nation of Gabon had come out against the deal, but later approved the sale. The government of Congo Republic had also said Bharti-Zain deal broke law.
There was also a dispute about minority ownership of Zain’s operations in Nigeria, the biggest market in the deal. Minority shareholder Econet Wireless was seeking to overturn a 2006 deal by Celtel in which it bought a majority stake in VeeNetworks Ltd,which later turned out to be now Zain Nigeria.
Under the terms of the deal, Bharti had to pay $8.3 billion to Zain in the first tranche, and the remainder after one year from the closing.
Bharti had secured debt of up to $8.5 billion from a clutch of lenders to fund the deal, and may have to spend more to expand networks that analysts say have been under-invested for years.
The company also recently paid about $2.6 billion for acquiring 3G licences in India and will have to pay more after an ongoing auction for wireless broadband radio spectrum is completed.
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