Bharti Airtel has signed a deal to buy most of the African operations of Kuwait's Zain for $9 billion (Ôé¼6.7 billion), making it AfricaÔÇÖs number two mobile phone operator.
The deal, which will also make Bharti the fifth-largest operator in the world, is India's second-biggest cross-border acquisition in history, after Tata Steel's $13 billion acquisition of Corus in 2007.
Bharti will acquire Kuwait City-based Zain's assets in 15 African countries, but will not take on its Moroccan and Sudanese units. Around 42 million of ZainÔÇÖs total 70 million customers are based in Africa.
The transaction, which is subject to shareholder approval, will raise Bharti's subscriber base to about 180 million and give it access to the rapidly growing African market.
With almost 125 million customers, Bharti is India's largest mobile phone operator by subscribers. Zain is KuwaitÔÇÖs largest phone operator, with over 70 million customers.
Sunil Bharti Mittal, chairman and managing director of Bharti, commented: ÔÇ£This agreement is a landmark for global telecom industry and game changer for Bharti Airtel. More importantly, this transaction is a pioneering step towards South-South cooperation and strengthening of ties between India and Africa.ÔÇØ
He added: ÔÇ£We are excited at the growth opportunities in Africa, the continent of hope and opportunity. We believe that the strength of our brand and the historical Indian connect with Africa coupled with our unique business model will allow us to unlock the potential of these emerging markets.ÔÇØ
Asaad Al Banwan, chairman of Zain Group, said: ÔÇ£Bharti Airtel has a fantastic track record in running successful operations in the emerging markets and we are delighted that the African telecom operations that we so assiduously built are becoming part of such a committed and reputable telecom powerhouse. We wish Bharti Airtel all the very best for their future success in Africa.ÔÇØ
Indian carriers have been seeking recently to expand overseas amid increasing domestic competition and price wars.
Africa has been a long-coveted market for Bharti, since it is one of the few regions in the world still offering growth, with relatively low mobile penetration. Advances in mobile phone technology are now driving prices down to within reach of many African consumers.
In addition, many of AfricaÔÇÖs biggest economies are beginning to experience relative political stability, which will help to drive faster growth.
Bharti is said by analysts to be expert at maximising profits from its mobile phone business, since most of its subscribers on average spend only a few dollars per month on service. This skill is likely to be transferable to its new African operations and is expected to lead to boost its success.
Zain has said that it will use the funds from the Bharti deal to focus on growth in the Middle East, in line with its current expansion strategy. It has said it expects net proceeds of up to $5 billion (approximately Ôé¼3.7 billion) from the sale after paying certain liabilities.
