Bharti Airtel completes $9Bn Zain Africa Acquistion

(Wireless Federation) Sunil Bharti Mittal has announced that Zain Africa is now a 100% subsidiary of Bharti Enterprises.

Salient points:

- Airtel is the World’s fifth largest mobile operator with 180 million customers.
- Airtel brand will replace Zain in October 2010.
- Dispute with Broad Comm resolved.
- MTN was the first opportunity, not the first choice” – Mittal

Zain brings with it, 42 million customers, $3.6Bn revenue and $1.2B EBITDA, taking the total of the combined entity to over 180 million customers, $12.4 billion revenue and $4.7 billion EBIDTA, making it the world’s fifth largest mobile operator. Airtel had raised $8bn to finance this deal.

African Targets for Airtel

Manoj Kohli will lead Airtel Africa from Nairobi. He set out some targets for Airtel Africa by 2012-13:

- 100 million customers (up from the current 42 million)
- $5 Billion in revenue (up from the current $3.6 Bn)
- $2 Billion EBITDA (up from the current $1.2 Billion EBITDA)

Speaking at a press conference in New Delhi, Mittal said that they hope their Vendor partners will follow them to Africa.

The Airtel Brand will be launched in October across the 15 countries. Kohli is flying out to Nairobi later this week and they seem to have a huge leadership workshop planned. He said that around 40-50 people will shift to Africa from Airtel India and around half that will come into India from Africa to cross-polinate learnings from both sides.

Airtel is currently number 1 in 10 countries in Africa, and there are, on an average 2-3 telecom operators in a country. In the continent, Airtel is number 2 after MTN, and covers a population of 450 million.

Airtel Nigeria

Bharti also announced that the issues that the company was facing in Nigeria have now been partially resolved. In a statement, Bharti said: The long standing litigation on multiple fronts by our main local partner, Broad Communications Group and it’s affiliates, owned, controlled and managed by Mr. Oba Otudeko and his family has been satisfactorily settled. Broad Communications will withdraw all its court cases in this regard. Mr. Otudeko is being appointed as the Chairman of our company in Nigeria”.

According to Mittal, Nigeria is one of the largest growing markets in the world.

No additional money was paid to Broad. It is in his (Otudeko) interest and ours to make this company grow,” Mittal said. Broad is the largest shareholder in Zain Nigeria. Mittal said he was stunned by the pace of growth in the Nigerian market it is buzzing and ready for higher usage of minutes. The distribution of phones and SIM cards is higher than in India there are people there selling SIM cards at the roadside. Zain is number 2 in that market.”

Mittal said that they had not had any contact with Econet Wireless, but were told that Airtel is within its rights to take over Zain, and that they are satisfied. Besides, Airtel is fully indemnified.

MTN Vs Airtel in Africa

MTN was the first opportunity, not the first choice” – Mittal said. He added that Zain is a better deal because they have full management control, whereas in the MTN deal they had board control nad not management control. Managment control will be extremely crucial to replicate the minute factory model.

Support From the Indian Government

He also added that the company received overwhelming support from the Indian government, which supported and pushed Airtel to go to Africa Manoj Kohli was in regular touch with High Commissioners in the countries where Zain operates.