Bharti Airtel on Monday announced it would hold discussions on an exclusive basis with Zain Telecom of Kuwait for acquiring its African operations for which the Sunil Mittal-led firm has made an offer of $10.7 billion.
The announcement by the Indian telecom leader for exclusive discussions till March 25 came a day after its bid was approved by the Zain telecom's Board.
During the exclusive agreement, Bharti would assess the financial parameters and other related issues, including regulatory norms that are needed to be in place for the deal that could make Bharti among the top 10 operators globally.
"Bharti and Zain have agreed to enter into exclusive discussions until March 25, 2010 for the acquisition of Zain's African unit based on an enterprise value of $10.7 billion," the company said.
This acquisition attempt comes within a month of Bharti buying a majority 70 per cent stake in Warid telecom of Bangladesh and the African venture could become the year's largest telecom deal.
This is Bharti's third attempt in the last two years to enter the African market.
In September last year, Bharti's $23 billion merger talks with MTN fell through for the second time due to various reasons including regulatory approvals.
"We all believe that, we would be welcomed in that continent. I am sure we will go and speak to the regulator and hopefully get the requisite permissions," Bharti Enterprises managing director Rajan Mittal said on sidelines of an event.
Bharti Airtel, however, plunged over nine per cent on the Bombay Stock Exchange. Asked how different the deal is from the MTN bid from regulatory perspective, Mittal said, "Every country has their own regulatory process so that (Zain) cannot be compared with MTN. Few countries need regulatory approvals and I am sure we will work towards that."
Zain has operations in 17 African countries and Bharti's offer covers all, but those in Sudan and Morocco. If materialises, Bharti will have nearly 42 million subscribers more into its kitty over an above 125 million users in Indian operations.
"This potential transaction does not include Zain's operations in Morocco and Sudan and remains subject to due diligence, customary regulatory approvals and signing of final transaction documentation," Bharti said.
Other than India, Bharti has operations in Sri Lanka and Bangladesh. Bharti had recently rejigged its top management and had created a separate unit headed by CEO Manoj Kohli to look into overseas opportunities.
Asked about the source of funding of the deal, company officials declined to comment.
