Bharti confident of Zain deal, shares rise 2%

Bharti confident of Zain deal, shares rise 2%
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First Published: Wed, Feb 17 2010. 11 20 AM IST
Updated: Wed, Feb 17 2010. 11 20 AM IST
New Delhi: Bharti Airtel does not see any funding issues for its planned $9 billion deal to buy Zain’s African assets and is confident to seal the takeover by the 25 March deadline, its chief was quoted as saying in a interview.
Bharti said on Tuesday its total likely payout for buying Kuwaiti group Zain’s operations in 15 African countries would be about $9 billion and $1.7 billion of net debt on the target unit’s books.
In an interview at Barcelona at an industry conference, Mittal told the Economic Times newspaper that the company is not concerned about legal issues surrounding Zain’s Nigeria operations.
“We are currently doing the last round of due diligence, and I am sure we can complete the process in the short and tight deadline that we have,” Mittal, Bharti’s founder and chairman, told the paper.
“The financial plans will be laid out in totality over the coming days. All I can say is that funding has never been an issue and will never be an issue for Bharti,” he said.
Bharti is likely to finance the purchase with foreign currency loans, three people familiar with the matter told Reuters on Tuesday.
Bharti has been hunting for emerging market assets as its home turf becomes fiercely competitive and call charges plummet in the world’s fastest-growing mobile market.
Bharti’s move follows two failed attempts to agree a $24 billion tie-up with MTN Group, Africa’s biggest mobile operator.
Mittal said a series of announcements on the deal would be made over the next couple of days and added that he was optimistic about the opportunity in African markets.
“We have obviously gone into the deal with our eyes open - very much open and we are, therefore, very excited about this opportunity,” he told the paper.
By 11.00 am, Bharti shares gained 2% up in a Mumbai market up 1.5%. The stock fell more than 13% over the past two days on market concerns that the debt burden to finance the deal could weigh on Bharti’s balance sheet.
Bharti was the second-worst performing stock in the benchmark index in 2009 and fell 89%.
Bharti’s shares have seen at least two downgrades in the last two days with analysts worried about the quality of assets Bharti is set to buy and some saying the firm was getting into a pricey deal.
But Mittal said the criticism by analysts of the high price being paid was a “fairy tale.”
“We don’t look at analysts’ views of cost per customer but the growth potential that Africa offers,” he said.
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First Published: Wed, Feb 17 2010. 11 20 AM IST
More Topics: Bharti Airtel | Zain | Telecom | Sunil Mittal | Zain |