In a press statement released yesterday, Bharti Airtel said that it has successfully secured the complete amount it requires for the proposed acquisition of the Kuwait-based Zain Telecom’s Africa unit (Zain Africa BV). In a related development, Bharti’s stock prices surged 2.2% in the morning session on the BSE, in wake of the impending acquisition.
According to the statement, the financing was oversubscribed, with major international banks committing to underwrite the total amount. Standard Chartered Bank, which is also Bharti’s lead adviser, has committed the highest amount at USD 1.3 billion followed by USD 0.9 billion by Barclays, according to sources. Other co-advisors, which include ANZ, BNP, Bank of America Merrill Lynch, Credit Agricole CIB, DBS, HSBC, Bank of Tokyo Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation have contributed USD 600 million each. In addition, USD 1 billion would be provided by the SBI group in Rupees. Global Investment House KSCC is serving as Bharti Airtel’s Regional Financial Advisor on this transaction.
This is the third time Bharti has made a serious bid for a control of the African market after two failed bids for South Africa based MTN. The talks between Bharti and Zain are scheduled to go on till 25th March. Zain had initially been valued at USD 10.7 billion but the payout is USD 9 billion, after deducting the debts, USD 8.3 billion of which is to be paid now, and the rest USD 700 million after one year.
India now has 14 telecom providers as compared to just two around a decade back. Faced with extremely strong competition in the Indian market, Bharti is looking to gain a foothold in Africa through Zain, by gaining access to its 40 million subscribers spread over 24 countries. Sources add that Bharti’s experience in handling low-cost operations in countries like Sri Lanka will help turn a loss making firm like Zain into a profitable venture. If the deal goes through, it would be another shining example of Indian companies acquiring a global presence after Tata and ONGC.
Way to go for Bharti. They will leave behind RCOM and Voda in terms of user base after this.