New Delhi: India’s biggest telecom company by both revenues and subscribers, Bharti Airtel Ltd, on Tuesday announced the signing of a legally binding, definitive agreement with the Kuwait-based Zain Group for the acquisition of the latter’s African operations.
Under the agreement signed in Amsterdam, based on an enterprise valuation of $10.7 billion (Rs48,043 crore), Bharti will acquire Zain’s mobile services operations in 15 countries with a combined strength of 42 million customers. The deal includes a $9 billion cash component.
Deal done: Sunil Mittal. Harikrishna Katragadda / Mint
This is the third attempt by Bharti Airtel to enter the African market, after two failed bids earlier to acquire MTN Group Ltd of South Africa. The deal propels the Indian firm into the league of the top five telecom operators in the world. The combined entity will have a subscriber base of 179 million spread across 18 countries.
“This agreement is a landmark for the global telecom industry and game changer for Bharti,” said Bharti chairman Sunil Bharti Mittal.
“We believe that the strength of our brand and the historical Indian connect with Africa coupled with our unique business model will allow us to unlock the potential of these emerging markets,” Mittal added in a statement.
The Zain acquisition is the second buy-out for the Indian telecom company, following the purchase of Bangladesh’s Warid Telecom Pvt. Ltd in January for $300 million.
Bharti, facing ferocious competition at home, is betting that the opportunities in Africa are worth the risks of operating there and is paying, what many regard as a full price, at 10 times enterprise value to Ebitda (earnings before interest, tax, depreciation and amortization) as a cost of entry.
(‘Reuters’ contributed to this story.)