BackBharti Airtel becomes fifth largest telco, seals Zain deal
Bharti Airtel becomes fifth largest telco, seals Zain deal
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New Delhi: India’s largest telecom firm Bharti Airtel Ltdsaid on Tuesday it had become the world’s fifth largest telco after closing the $9 billion (Rs42,300 crore) deal to buy the African assets of Kuwait’s Mobile Telecommunications Co., or Zain.
The combined business will be 180 million customers in 18 countries and annual revenue of $12.4 billion.
The deal comes when profit margins are shrinking in the Indian telecom market.
Manoj Kohli, chief executive officer of Bharti’s international operations, will relocate to Nairobi next week with his team. “I have three goals in mind (for the Africa operations). Hundred million customers, $5 billion in revenues and $2 billion Ebitda (earnings before interest, taxes, depreciation, and amortization) by financial year 2012-13."
Bharti has reached a settlement with Broad Communications Ltd, the single largest shareholder in Zain Nigeria, following which its chief Oba Otudeko will be chairman of Bharti’s operations in Nigeria.
“There is no extra payment made for the settlement," Bharti chairman Sunil Mittal said, adding that the firm does not see any problem with another small shareholder, Econet Wireless Pvt. Ltd, in Nigeria. Bharti also announced $7.5 billion of long-term financing from banks at 175 basis points above the London interbank offered rate, a lending benchmark, despite tight financing conditions because of the European debt crisis.
Analysts?say?Bharti will need to customize its “minutes factory" model to succeed in Africa. “It will be important to provide a local flavour in each market," said Rajiv Sharma of HSBC Securities and Capital Markets (India) Pvt. Ltd in a 8 June report.
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