rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » Zain to gain $3.3 bn from Bharti deal

Zain to gain $3.3 bn from Bharti deal

March 31, 2010 17:37 IST

Zain Telecom on Wednesday said it would earn $3.3 billion from sale of its African assets to Bharti Airtel for $10.7 billion even as the Indian operator said the deal is well-priced.

In a filing to the Kuwait Stock Exchange, Zain said that it has sold the African operations other than in Sudan and Morocco to Bharti Airtel for $10.7 billion and the two parties have signed definite agreements.

Immediately after signing the deal, Sunil Mittal, promoter and Chairman of Bharti Airtel had said that "Bharti- Zain is a well-priced deal and is comfortable with the debt taken to fund the acquisition."

Bharti signed the deal last night in Amsterdam and is all set to become fifth largest wireless operator in the world with a combined subscriber base of over 179 million and operations across 18 nations.

Bharti has taken a debt of $8.3 billion, to be paid upfront, besides paying another $700 million after one year. It has taken a loan liability of $1.7 billion on its books.

When asked what impact the huge debts would have on the balance sheet of the company, Mittal told PTI on Tuesday that "we have taken a debt of $8.3 billion and shall try to reduce it on our balance sheets... but there is no hurry. We are comfortable financially".

Bharti Airtel's shares closed marginally high today after increasing nearly three per cent in early trade, indicating that the deal has been well received by investors.

Zain said that from receipts it would repay up to $4.2 billion of its credit facilities in addition to the allocation and expenditure of the deal.

The two companies are now moving ahead to seek necessary regulatory and government approvals from different countries, wherever required, and hope to close the deal in the coming few months.

Mittal also announced Manoj Kohli, CEO, International, and Joint MD of Bharti Airtel, to head the African operations.

Asked about the hurdles in Zain-Nigeria and in Gabon, where the local partners had disapproved of the sale, Mittal had said that "he does not see any regulatory hurdle there" and added he would work with the partners in the coming weeks.

Zain Nigeria's minority partner Econet had earlier said that they were in arbitration against the parent company. "We hope to get regulatory approvals in all the 15 countries in the due course of time," he said.

© Copyright 2013 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.