Zain's Kuwait head office

They almost tied the knot last year. But now SA’s MTN Group could soon find itself competing head-on with India’s Bharti Airtel in its own backyard.

On Monday, Kuwait’s Zain announced that it had agreed to enter into exclusive negotiations until 25 March, during which time Zain will consider Bharti’s offer, believed to be worth about US$10bn.

If the deal proceeds, Bharti will acquire 15 of Zain’s 17 subsidiaries across Africa. Morocco and Sudan are excluded from the sale. It will give Bharti access to more than 40m cellular customers across the continent.

The sale, assuming it happens, will put Bharti and MTN on a collision course in Congo-Brazzaville, Ghana, Nigeria, Uganda and Zambia where both MTN and Zain operate cellular networks.

The other markets Bharti will gain access to are Burkina Faso, Chad, the Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Sierra Leone and Tanzania.

Frost & Sullivan ICT consultant, Lindsey McDonald, says a deal with Zain will turn Bharti and MTN into “highly competitive rivals”.

It’s ironic given the two were close to consummating a marriage in 2009. Merger talks between MTN and Bharti have twice broken down, most recently because of difficulty in getting the necessary government and regulatory approvals. If the deal had proceeded, it would have created one of the world’s largest emerging-markets telecoms groups.

The talks between Bharti and Zain aren’t entirely unexpected given that Zain’s African assets have been on the chopping block for some time. France’s Vivendi last year considered a deal with Zain but walked away.

“Zain’s interests in Africa have been under scrutiny for some time as news surfaced that the operator was considering a sale of its African assets,” says McDonald. “This was met with surprise from market watchers conscious of the fact that the business had invested heavily in order to acquire its status as a leading regional mobile player.” — Duncan McLeod, TechCentral