Bharti - It has completed the acquisition of Zain's Sub-Saharan African interests

[bloomberg] Billionaire Sunil Mittal’s Bharti Airtel Ltd. said it completed its $9 billion purchase of the African assets of Kuwait’s Mobile Telecommunications Co., also known as Zain.

The acquisition gives Bharti an “unparalleled footprint,” Mittal said at a briefing in New Delhi today. The combined business will have 180 million customers and generate earnings before interest, tax, depreciation and amortization of $4.7 billion on revenue of $12.4 billion, according to Bharti.

Bharti’s entry into Africa gives India’s largest wireless carrier access to a population of about 470 million people from the Atlantic coast to the Indian Ocean, with just over a third of them carrying mobile phones. This comes as Bharti’s earnings slid in India and the company added customers at the slowest pace among the nation’s seven largest operators.

“The reward is to export the ‘minute factory’ model to Africa and get the same operational metrics in an environment which is less competitive than India,” Theo Maas, who owns Bharti shareholder Singapore Telecommunications Ltd. as part of the $4.5 billion in equities he helps manage at Arnhem Investment Management in Sydney, said in an e-mail before the announcement.

Bharti fell 3.7 percent to close at 258.35 rupees in Mumbai trading, the third-biggest contributor to the benchmark Sensitive Index’s 1 percent decline. The stock is the second- worst performer in the past 12 months among the 87 companies on the Bloomberg World Telecommunications Index.

‘A Billion People’

“A billion people, 10 times the size of India, it poses truly amazing opportunities to grow within the 15 countries, and we’re looking at more opportunities as we build and roll out Airtel in Africa,” Mittal said.

The purchase of Zain’s African assets will pit Bharti against Vodafone Group Plc, the world’s biggest carrier, and MTN Group Ltd., the continent’s largest operator. Bharti and MTN failed for a second time last year to complete a $23 billion merger. The two companies will compete in five countries, including Nigeria, the largest African nation by population and mobile-phone subscribers.

With the addition of Zain Africa, Bharti will have operations in 18 countries, including India, Bangladesh and Sri Lanka, and becomes the world’s fifth-largest wireless company by customers, Mittal said.

Nairobi Headquarters

Bharti had to negotiate with regulators in all 15 countries where the company acquired Zain’s operations. The company plans to rebrand the businesses and locate its headquarters in Nairobi, said Manoj Kohli, Bharti’s chief executive officer for international operations.

Broad Communications Ltd. will withdraw a lawsuit filed against the Nigerian operations of Zain, after an agreement was reached, said Mittal. Other litigation in Nigeria “will be dealt with,” Kohli said.

Econet Wireless Holdings Ltd., based in a suburb of Johannesburg, said in March it was disputing control of Zain’s unit in Nigeria.

Zain, Kuwait’s largest mobile-phone operator, received $7.9 billion from the sale of its Africa operations and will include the profit in its second-quarter earnings, Chief Executive Officer Nabil bin Salama told a news conference in Kuwait today.

The company will receive additional payments from the sale totaling $1.1 billion by one year from completion of the deal, Zain said in a statement today.

Zain is not in talks to sell a stake to any other company, the CEO said.


Bharti Completes $9 Billion Purchase of Zain Africa