|Bharti Airtel Limited (Bharti Airtel), one of Asia’s leading telecommunications service providers, is set to become world’s fifth largest wireless company with operations across eighteen countries. After two previously unsuccessful attempts to enter the African market, the company announced yesterday that it has entered into a legally binding definitive agreement with Zain Group (Zain) to acquire Zain Africa BV. Under the agreement, which is based on an enterprise valuation of US$10.7 billion, Bharti Airtel will acquire Zain’s African mobile services operations in 15 countries, which carry a total customer base of over 42 million. Zain is the market leader in ten of these countries and ranks second in four countries. The agreement will see Bharti Airtel’s network expand to cover over 1.8 billion people – the second largest population coverage among Telcos globally. Bharti Airtel’s actual total customer base will increase to around 179 million in eighteen countries.
The company has certainly come a long way since launching mobile services in India in 1995. This acquisition – if approved by regulators – will reportedly be the second biggest overseas purchase by an Indian company after Tata Steel’s US$13 billion purchase of Corus in 2007. Bharti Airtel’s chairman and managing director, Sunil Bharti Mittal, commented, “This agreement is a landmark for [the] global telecom industry and [a] game changer for Bharti. More importantly, this transaction is a pioneering step towards South-South cooperation and strengthening of ties between India and Africa…. We are excited at the growth opportunities in Africa…. [and] We are committed to partnering with the governments in these countries in taking affordable telecom services to the remotest geographies and bridging the digital divide.”
India’s AZB & Partners is playing a lead role as counsel to Bharti Airtel, with Herbert Smith understood to have been retained to manage the international legal aspects and due diligence on the deal. Linklaters is advising Zain.
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