Bharti Chief thanks partners after signing Zain Africa deal
www.WirelessFederation.com/news: With the consummation of the US$10.7 billion deal with Zain Africa, Bharti Airtel chief Sunil Mittal extended his gratitude to its partner Sing Tel for providing its much needed support. As a co-promoter, SingTel holds 31 per cent stake in India-listed Bharti Airtel and therefore its support is critical to any major M&A deal by the company.
According to Bharti Airtel Chairman and Managing Director Sunil Mittal who signed the deal in Amsterdam, the extremely tight time lines and the enormity of the task posed a real challenge. Bharti was able to achieve this important milestone through much hard work and support from SingTel and the external advisors.
All the team members involved in the completion of this hyped deal was also thanked by Mittal making the company world’s fifth largest mobile operator in terms of subscriber base and second largest in terms of population covered by its services. Representatives of the Singapore based telecom giant, Sing Tel have been present in almost all the board meetings discussing the transaction.
Bharti Airtel & Zain to sign Africa deal on Tuesday
www.WirelessFederation.com/news: The much talked about $10.7 bn deal between Kuwait’s Zain telecom and India’s top mobile firm Bharti Airtel, which has been making the rounds of the telecom world is expected to be signed on Tuesday at the headquarters of Zain Africa.
African market was penetrated by Zain in 2005 by the acquisition of the operations of the Dutch Celtel firm for around $3.5 billion. Last week, both the companies stated that they have finalized agreement for the sale of Zain’s operations in 15 African nations. Zain’s operation in Sudan or its investment in Morocco is not included in the sale of the African assets.
$8.3 billion, raised mainly from international banks, will be paid by Bharti on signature of the deal, while the remaining $700 million will be paid a year later. Through the deal, 42 million clients in 15 African countries from Burkina Faso to
Zambia would be gained by Bharti while Zain clients will shrink to 30 million from 72 million.
Bharti regains losses as investors revisit Zain deal (India)
www.WirelessFederation.com/news: Within two days of the announcement that Bharti Airtel and Zain will enter into exclusive talks for Zain’s African assets, Bharti lost $3.6 billion in market capitalisation.
However, an improvement in the investor’s sentiments has been noticed since then, primarily after Bharti’s conference call with analysts in end-February on the Zain acquisition. The main concern was the fact that the valuation of the deal at 11.6 times estimated 2009 EBITDA was far too high.
In its clarification, the company said that the $1.7 billion debt component in Zain Africa’s enterprise value is inclusive of the share attributable to minority shareholders. The company has also indicated that tax rates in Africa are relatively lower, which justifies some premium in the valuation. Besides, the capital infusion of $9 billion of Zain till date makes the valuation of $10.7 billion look reasonable. The fact that Zain’s margin is lower than Bharti’s margin also leaves room for cost containment.
$4 billion would be used by Zain Africa’s holding company to retire debt on its books with the interest burden of $4 billion debt already reflected in Zain Africa’s financials, hence, the incremental interest burden would only be on $5 billion of debt.
All the factors have contributed well to improve the sentiments of the investors and has helped Bharti regained almost two-thirds of those losses.
Zain interested in SA licence (South Africa)
Kuwait’s Zain Group has said it is eyeing a mobile licence which could become available in South Africa next year. The country already has three established operators Vodacom, MTN and Cell-C who were sharing almost 45.4 million subscribers at the end of March 2008. A report from Reuters cites Zain Africa’s CEO Chris Gabriel, who says: ‘We are interested in the South African market and we heard reports about a fourth mobile licence coming up.’ He adds: ‘If there is an opportunity we will definitely consider it.’ Last month, Khotso Khumalo, the chairman of the country’s parliamentary portfolio committee, told journalists at a media briefing that the government will license a fourth mobile operator and a third fixed line operator in 2009 though no further details have been revealed.
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