After two failed attempts to agree a $24 billion tie-up with South Africa’s MTN Group, Bharti announced on Monday an offer to buy the African assets of Kuwait’s Zain telecom for $10.7 billion. Bharti Airtel and Zain Africa have agreed to enter into exclusive discussions until 25 March, 2010 for the acquisition of Zain’s African unit based on an enterprise value of $10.7 billion.
Shares of Sunil Mittal’s Bharti Airtel plunged about 10% after this announcement as most of the brokers believed the $10.7 billion to be overrated. Meanwhile the telecom minister A.Raja has commented that the deal would be good for the telecom industry.
Bharti for a long time has been desperately looking to enter into international markets after the domestic market has seen the entry of a large no. of service provides and the company sees the domestic market saturating within 4-5 years.
Kuwait-based telecom company Zain, is the third-largest operator in the Arab and has spent more than $12 billion expanding in Africa since 2005 but it would be tough for Bharti to tap Zain’s full potential.Zain has already clarified that the deal would exclude operations in Morocco and Sudan. The Kuwaitis have already described it as win-win situation for both parties. Definitely a deal to watch out for!!