Bharti Airtel has entered into exclusive talks with Kuwaiti telecoms group Zain in a bid to acquire its African assets for US$10.7 billion. Bharti proposes to make an initial payment of US$10 billion, with the remaining US$700 million to be paid a year after the conclusion of the deal. The deal does not include Zain’s operations in Sudan or its investments in Morocco. If the transaction proceeds, it will be one of the largest cross-border deals in the Middle East and will create one of the world’s leading emerging markets wireless providers, with operations in more than 24 countries.
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Bharti’s move comes just months after the collapse of its proposed US$23 billion merger with South African telecoms giant MTN. The company is aggressively pursuing overseas opportunities and last month sealed a deal to acquire 70% of Abu Dhabi Group’s Warid Telecom, after receiving approval from Bangladesh’s telecom regulator.
Any agreement for the purchase of Zain Africa would require the approval of the Kharafi Group and the Kuwait Investment Authority, two of Zain’s largest shareholders. The Kharafi Group, owned by one of the Middle East’s wealthiest families, holds an 11% stake in Zain through a subsidiary, Al-Khair. The Kuwait Investment Authority, the country’s sovereign wealth fund, owns 25% of the company.
Last year Zain rejected an informal offer by French media and telecoms company Vivendi to acquire a majority stake of between 51% and 65% of its African businesses. Vivendi later decided the acquisition was not in the best interests of its shareholders.
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