Bharti now among global top 5

Sunil Bharti Mittal, Founder, Chairman and Group CEO of Bharti Enterprises

Announcing the closure of the deal, Sunil Mittal said, “We are delighted at the closure of this transformational deal for India and Bharti Airtel. The transaction is the largest ever cross-border deal in an emerging market and will result in combined revenues of about $13 billion.”

Mittal said that Zain Africa will be renamed Bharti Airtel International BV and 15 top Zain executives will move to India.

Debt for Zain and Bharti’s 3G spectrum combined stands at $10 bn. Combined interest outgo for Bharti would be $200 mn annualy. Will use Zain expertise in running 3G operations

This is also the largest overseas acquisition of assets in Africa by an Indian company, even though it does not cover the Kuwaiti company’s operations in Sudan and Morocco.

The total customer base of Bharti now stands at over 180 million in 18 countries. Mittal said, “African operations will not be profitable immediately and will not go to middle east.” He reiterated that Airtel will not enter South Africa.

The closure of the deal implies that Bharti has received all the approvals from the governments and regulators of each of these 15 nations.

Earlier in the morning,a 40-member management team from Bharti Airtel headed by its CEO for international operations, Manoj Kohli will soon relocate to Kenyan capital Nairobi, the city chosen by the telco to base its African headquarters.

This management team will work with Zain’s top executives in all 15 countries where it offers services in Africa and oversee its operations.

With Zain Africa’s 42 million customers, Bharti Airtel will have over 180 million subscribers, making it the world’s fifth-largest mobile phone operator.

The deal will also give Bharti a firm foothold in the relatively untapped African market and the combine will have revenues of $13 billion and earnings before interest, taxes, depreciation and amortisation of around $5 billion.

This was Bharti’s third attempt to enter the largely untapped African market after the failure of merger pacts with South African telecom major MTN on two occasions. Africa accounts for a little over 60 percent of Zain’s 71.8 million customers.

The $10.7-billion deal, including $1.7 billion of Zain’s debt, was signed in Amsterdam, the base of Zain’s African unit on March 30.

The tariff war that has plagued India’s telecoms space over the last one year has lowered profits and valuations of most mobile firms in India, forcing the likes of Bharti Airtel to look for attractive options outside the country.

Bharti Airtel has already sought bids to outsource operations worth over a billion dollars for African assets of Zain Telecom, suggesting it islooking for better deals than those being offered by its existing partners.