With Zain Telecom?s board on Wednesday approving the $10.7-billion sale of the Kuwaiti firm?s African unit to Bharti Airtel, the decks have been cleared for one of the biggest cross-border telecom deals in the country. A final announcement of the deal is expected in a day or two.
While no official confirmation was available from either side, sources said only last minute formalities need to be tied up now. The period for exclusive talks, which the two sides had set on February 15, comes to an end on Thursday.
As reported earlier, the Bharti board has already approved the deal last week and announced that it has tied up funds for the entire $8.3 billion, which is the immediate payout by Bharti. A consortium of banks led by Standard Chartered and Barclays would lend it $7.5 billion and State Bank of India would lend another $1 billion through a rupee loan.
Post-acquisition, Bharti Airtel would become the world?s seventh largest telecom operator by subscriber base with a combined subscriber base of over 165 million. The combined entity would have a revenue base of close to $13 billion with presence across 20 countries.
The fructification of the deal would finally enable Bharti to implant its low cost-high volume business in an emerging market marking the first move towards becoming a global telecom player. In the past, it tried twice, unsuccessfully, to acquire South African telecom firm MTN.
Bharti needed branching out to overseas market at this stage as growth in the domestic market has come under pressure with an ongoing tariff war and a crowded market with 12 operators per circle. The company?s October-December earnings got reduced to low single digits. Africa represents about 62% of Zain?s 64.7 million customers and 15% of the groups? net profit.
Bharti had valued Zain Africa at $10.7 billion but after deducting the company?s net debt of $1.7 billion, it said the total payout would be $9 billion (around Rs 44,000 crore). The two sides have agreed that of the $9 billion, $700 million would be payable a year after the deal is announced, thus, the immediate payout from Bharti?s end would be $8.3 billion.