- DUBAI: Mobile phone operators Zain and Bharti Airtel Ltd.
- said Monday they have agreed to a $10.7 billion deal that will give Bharti access to the growing African markets it has long coveted.
The sale, if it goes through, would make Bharti an even bigger telecom player in the emerging world, where cellular phones are often the sole gadget of choice and primary means of communications for hundreds of millions of people.
Bharti is India's biggest mobile phone provider, though cutthroat competition has slowed its growth at home.
For Kuwait-based Zain, the deal is a chance to finally cash in on an expansion led by its recently ousted chief executive after a previous attempt to sell the African holdings failed.
The companies said they have agreed to enter into exclusive talks until March 25 to hammer out details. The deal does not include Zain's holdings in Sudan or Morocco.
Both companies struck a cautious tone in nearly identical brief statements.
"There can be no assurance that a transaction will be consummated. Further announcements will be made in due course," the companies said, adding that the sale is subject to due diligence and regulatory approval.
A spokesman for Zain, known officially as Mobile Telecommunications Co., declined to provide additional details. He said management would not be making any further comment about the deal.
A Bharti spokesman also declined to comment.
Monday's announcement confirms unsourced reports in the Kuwaiti press over the weekend that a deal was near. Zain said Sunday it had received a bid for the African division from an unnamed suitor, but did not name the price or respond to unsourced reports that a deal had been reached.
Simon Simonian, an analyst at Dubai-based investment bank Shuaa Capital, said the operations being sold cover 42 million mobile subscribers across 15 countries.
He said Bharti was paying a premium for the businesses, but that the deal gives the Indian company "immediate access" to a prominent brand in multiple countries where new operating licenses would be hard to come by.
"Africa has become a more competitive market in the past few years," he said. "The franchises of Zain are mostly No. 1 or No. 2 in these markets." Zain's recently replaced Chief Executive Saad Al-Barrak led the company's push into Africa with the 2005 acquisition of pan-African mobile operator Celtel. He was replaced by Kuwait's former communication, electricity and water minister, Nabil Bin Salama, last week.
The sale will slash the number of countries where Zain operates by nearly two-thirds, allowing it to focus on about 30 million users across eight countries in the Middle East, including Jordan, Saudi Arabia and Iraq.
Zain tried unsuccessfully to sell its African unit to Vivendi SA last July. Talks broke down weeks later, with the French media conglomerate saying that the deal failed to meet its criteria for profitability and financial discipline.
Bharti previously tried to expand into Africa by merging with South Africa's MTN Group Ltd., but that deal fell apart for the second time amid political pressure in September.
The Zain operations Bharti will acquire are located in Burkina Faso, Chad, the Republic of Congo, the Democratic Republic of Congo, Gabon, Ghana, Kenya, Malawi, Madagascar, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia.

