India’s largest mobile operator, Bharti Airtel, said on Tuesday it had
sealed a US$10,7bn deal to buy Zain’s African assets,
ranking it among the world’s top five cellular players.
With the acquisition, the second-largest foreign takeover in Indian corporate history, Bharti will acquire Kuwait-based Zain’s African mobile services operations in 15 countries, including Kenya, Nigeria and Tanzania.
“This agreement is a landmark for the global telecoms industry and a game changer for Bharti,” company chairman and founder Sunil Bharti Mittal said in an e-mailed statement, calling Africa “the continent of hope and opportunity”.
Bharti “will be transformed into a truly global telecoms company with operations across 18 countries, fulfilling our vision of building a world-class multinational”, the 52-year-old businessman added.
The acquisition finally realises a dream by the billionaire tycoon to gain a foothold in Africa, one of the world’s least developed telephone markets, after two failed attempts to acquire SA mobile giant MTN.
“We are excited at the growth opportunities in Africa,” Mittal said.
The number of people owning phones in the countries where Zain operates stands at just 32 out of every 100, compared with India’s 51.
Mittal, a self-confessed business “junkie” always hungering for the next deal, is looking to expand foreign revenues amid a savage price war at home.
But analysts say Mittal, who signed the deal at Zain Africa BV’s headquarters in Amsterdam, will need all his entrepreneurial chutzpah to turn around Zain’s loss-making African operations.
In Nigeria, for instance, where mobile phone ownership is
growing most rapidly, Zain has been losing subscribers to rivals.
Also, Mittal will be entering “not just one market but 15
markets”, said Romal Shetty, telecommunications head at global
consultancy KPMG’s India unit.
“You can’t play a single strategy for all of them,” he said. “He has a lot of work ahead.”
Bharti, 32% owned by Singapore Telecommunications, said in the statement it had “entered into a legally binding definitive agreement with Zain Group to acquire Zain Africa BV.”.
Mittal said that the company was betting that the strength of its brand, “coupled with our unique business model, will allow us to unlock the potential of these emerging markets”.
The trick for Bharti, which pioneered low-cost telecoms in India, will be to bring down Zain’s high cost base and win subscribers, say analysts — and to get subscribers to talk more using lower tariffs.
With this purchase, the second most costly foreign takeover by an Indian company since Tata Steel bought Anglo-Dutch steel producer Corus for $12,2bn in 2007, Bharti’s global customer base will increase to around 179m.
Under the agreement, Bharti will acquire most of Zain’s African mobile services with a total customer base of over 42m out of which Zain is a market leader in 10 and second in four others.
With the acquisition, which does not include Zain’s networks in Morocco or Sudan, Bharti said it would be the world’s fifth-largest wireless company by customers.
“We are delighted the African telecoms asset that we so assiduously built is becoming part of such a committed and reputable telecoms powerhouse,” Zain Group chairman Asaad Al Banwan said in the statement.
Bharti launched mobile services in India in 1995, Sri Lanka in 2009 and acquired Warid in Bangladesh in January 2010. — Sapa-AFP
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