This buyout not only makes Bharti to put footprint in Africa, but also positioned it as world’s fifth largest wireless company with operations across 18 countries and a subscriber base of around 180 million.
Of the $10.7 billion enterprise value of Zain, Bharti will be paying $8.3 billion upfront and $700 million after a year. It would also take over approximately $1.7 billion of Zain’s debts as on December 31, 2009.
Of the $8.3 billion paid to Zain, Bharti has raised debt from a consortium of foreign banks and State Bank of India with the lead-arranger and lead-advisor Standard Chartered Bank committing the highest amount $1.3 billion, followed by Barclays at $900 million.
The rest of the co-advisors — ANZ, BNP, Bank of America-Merrill Lynch, Credit Agricole CIB, DBS, HSBC, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation — have allocated $600 million each. State Bank of India has agreed to an up to USD one billion loan in rupee terms.
“This transaction is a pioneering step towards south-south cooperation and strengthening of ties between India and Africa. With this acquisition, Bharti Airtel will be transformed into a truly global telecom company with operations across 18 countries, fulfilling our vision of building a world-class multinational,” Mittal said on Tuesday.
On March 30, 2010, Bharti had entered the deal to acquire Zain Telecom’s operations in 15 nations, excluding Sudan and Morocco. Airtel is already present in India, Sri Lanka, Seychelles and Bangladesh (acquiring Warid Telecom).
Bharti had failed twice in the last two year’s to forge an $23 billion merger deal with South African telecom giant MTN.
Bharti is expected to launch the Airtel brand in Africa by October this year. Company set three targets A subscriber base of 100 million, five billion revenue in Africa and USD 2 billion EBITDA by 2012-13. Bharti Airtel also plans to take its low-cost model of sharing infrastructure to Africa for bringing down the tariff in the continent. The African headquarters of the company will be located in Nairobi.
Mittal said that Zain Africa will be renamed Bharti Airtel International BV and 15 top Zain executives will move to India.