Bharti rings in Africa

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Bharti Airtel on Tuesday completed the $10.7 billion acquisition of Zain Africa to become the world’s fifth largest telecom company. The company has now set its eyes to become third largest telecom company globally.

“You are all aware about the journey, we started in early February to acquire Zain’s African assets and today at 12.30 this afternoon we exchanged the papers, paid the money and took over the company. This is a culmination of a long dream,” said Bharti chairman and managing director, Mr Sunil Bharti Mittal.
The combined entity will have operations in 18 countries with 180 million customers and revenues of $12.4 billion.
In two earlier attempts, Bharti had failed to acquire South Africa based teleco MTN. Mr Mittal felt that the deal with Zain was better than MTN. “If you look, there were compromises to be made in the deal with MTN. It was a partnership where we had board control but no management control. Also there would not have been any brand change. We were fortunate to get a second chance and a much better chance,” he added.
Mr Mittal said that the Zain acquisition will help the company to roll out its low-cost model in Africa.
Bharti will launch its brand in Africa by October. “We have set a goal to acquire 100 million revenue earning customers and $5 billion revenues by 2012-13,” said Mr Manoj Kohli, the chief executive of Bharti’s international unit.
Mr Kohli, who earlier headed Bharti’s operations in Indian and South Asia, will be relocated to Nairobi, which will be the headquarters of Bharti operations in Africa.
He said that with growth in Africa and India, it will be possible for the company to narrow the subscriber gap with Telefonica and American Movil to emerge as the world’s third largest telecom company.
Telefonica which is the third largest telecom company has 206 million subscribers and American Movil which is the fourth largest has 201 million subscribers. Bharti has been adding upto three million subscribers in a month in India only.
Bharti has paid around $7.9 billion to Zain and will pay $400 million after completion of certain “milestones.”
The company has to pay another $ 700 million within a year. Bharti will take the debt on the books of the acquired assets which are estimated at $1.7 billion.