[ft] India’s Bharti Airtel is expected to pay for the African assets of Zain of Kuwait only once the Middle East operator receives regulatory approvals for the sale, in a move that shows the political risk of operating in the continent.
Within two weeks Bharti is also expected to dispatch to Africa one of its top executives, Indian telecoms veteran Manoj Kohli, to begin turning round the underperforming Nigerian network.
Bharti and Zain are expected to sign a sale and purchase agreement for the Middle Eastern company’s African assets excluding Sudan and Morocco as early as Tuesday in Amsterdam in a $10.7bn transaction that would create an emerging markets telecoms powerhouse.
But payment from Bharti is expected to be made in at least two stages depending on the progress of regulatory approvals, according to people familiar with the deal.
The first set of regulatory approvals, which would include Nigeria, Zain’s biggest African asset, is expected to pose few problems and to be cleared in the next few weeks.
The second set, which would account for about one-fifth of the total revenues of Zain’s African networks, could take longer.
Gabon has already raised questions about Zain Gabon’s compliance with telecoms regulations.
“It’s not that we are blocking the sale, it’s suspended while we wait for the results of the (telecom regulator’s review),” an advisor to Gabon’s information minister told Reuters on Monday, speaking on condition of anonymity.
One person familiar with the Bharti-Zain deal said the payments could be held in an escrow account pending regulatory approvals.
The Zain deal will make Bharti the biggest mobile group operating exclusively in the fast-growing markets of India and Africa, with a combined 165m subscribers.
Standard Chartered and Barclays are advising Bharti on the deal while UBS is advising Zain. Both declined to comment, as did Bharti.
Concerns over the deal led to sharp falls in Bharti’s share price after it was announced, although the stock has since recovered some ground, on Tuesday finishing up 0.69 per cent at Rs312.30 per share
Zain is the market leader in about two-thirds of the African markets but its competitors are growing more rapidly, leading to concerns that its supremacy is about to be challenged.
People familiar with the matter said that while Bharti planned to retain its African management teams, it would send Mr Kohli, its former head of Indian operations, to Nigeria as soon as possible to begin working on achieving synergies between its domestic operations and the African networks.
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Bharti awaits green lights for Zain deal