Bharti set to bag most of Zain’s Africa assets

The Bharti group and its chairman Sunil Mittal are likely to be at the centrestage of the Barcelona Mobile World Congress starting today as the leading telco is believed to be in advanced negotiation with Kuwaiti telecom firm, Zain, for a $10.7 billion acquisition deal, and an announcement may be in the offing.

It may remind one of last year’s ITU Telecom World, where the media was busy chasing Mittal for his comments on the proposed $24-billion transaction between Bharti and South Africa’s MTN. Eventualy, the merger talks with MTN collapsed.

Zain wants to sell its African assets, excluding some regions. The Zain board met on Sunday, as scheduled, to discuss the deal and “an offer has been accepted,” sources said. Besides Bharti, Vivendi and China Mobile are also learnt to be among the bidders for Zain’s African assets. French telco, Vivendi’s informal offer for a deal was rejected by Zain last year. There’s no official word yet on whose offer has been accepted by the board, but Bharti seems to be the clear frontrunner at this point.

A Bharti spokesperson declined comment.

Before the board meeting on Sunday, Zain told the local stock exchange that it had received an offer to sell some of its African assets. Subsequently, the stock exchange in Kuwait halted trading in Zain’s shares. On Saturday, media in Kuwait had reported that Bharti had offered up to $10.7 billion for the assets, and both Bharti and Zain had declined comment.

The largest shareholder in Zain, the Kuwait Investment Authority, is learnt to have had a meeting on Sunday ahead of the Zain board meet.

If Bharti is able to strike a deal with Zain, it will be the second global acquisition for the group in the year 2010. Last month, Bharti bought a controlling stake in Bangladesh’s Warid Telecom —- around 70% stake —- for an initial investment of $300 million.
Bharti’s emphasis on global acquisition is quite clear at this point as the CEO of its telecom unit, Manoj Kohli, was recently redesignated as the head of international business.

Bharti has maintained through the years that it is keen on expanding into emerging markets.

While Bharti’s subscriber base is at around 120 million, that of Zain is at 70 million (including Africa and West Asia). Its African assets, across 15 countries, have around 40 million subscribers.
In recent times, there have been reports suggesting that other
Indian telcos were in talks with Zain for acquiring stake. Reliance Communications, Bharat Sanchar Nigam, Mahanagar Telephone Nigam and an Indo-Malaysian consortium Vavasi are among those believed to have been in negotiations with Zain for an acquisition.