Zain Kuwait sells Africa operations to Bharti India
United Arab Emirates – Kuwaiti cell phone operator Zain has accepted an offer from Bharti Airtel Ltd. to sell most of its Africa businesses as it refocuses on its home market in the Middle East, the country’s official news agency reported Sunday.
Zain earlier in the day confirmed that it had received and was considering a bid for the company’s African operations, which account for the bulk of its customers, but did not name the suitor. Local newspapers said Bharti, India’s largest mobile phone company, was behind the bid with a $10.7 billion offer.
“Zain has received an offer in relation to its operations in Africa excluding Morocco and Sudan. The Board of Directors of Zain will be discussing this proposal” Sunday, the company said. “Further announcements will be made as appropriate.”
Kuwait’s state news agency KUNA reported that an agreement with Bharti had been reached, and that Zain’s board unanimously approved the deal.
A Zain spokesman did not immediately respond to a request for comment. Bharti could not be reached for confirmation.
Africa has become a key region for the Gulf mobile phone operator, known officially as Mobile Telecommunications Co., and a sale of its businesses there would slash the number of countries where the company operates by nearly two-thirds.
A deal would not be entirely unexpected, however. Zain has been hinting at plans to offload its African assets for months, saying in July it was putting its holdings on the continent under “strategic review.”
Simon Simonian, an analyst at Dubai-based investment bank Shuaa Capital, said Bharti made sense as a potential suitor.
“They showed an interest to expand in the emerging world. And Africa was a priority,” he said. “With this transaction, you have immediate access to 15 countries.”
He also said the reported selling price — which came from Kuwaiti newspapers such as al-Rai that have been correct with earlier Zain-related “leaks” — was in line with a previous bid for Zain’s African operations.
The offer comes less than two weeks after Zain’s chief executive, Saad al-Barrak, announced his resignation. He served as both managing director and deputy chairman, giving him considerable influence over the company’s direction since his appointment in 2002. No reason was given for his departure, though he was a driving force in the company’s push into Africa.
Al-Barrak was replaced as chief executive by Kuwait’s former communication, electricity and water minister, Nabil Bin Salama, last week. Sunday is his first day as CEO.
Kuwait’s stock exchange halted trading of Zain shares Sunday pending further information from the company.
Zain has floated an African assets sale before.
Talks with French media conglomerate Vivendi SA for the holdings became official last July but fell through later that month. Vivendi had wanted to buy a majority stake in the African businesses to expand its presence in growing emerging markets.
Zain announced a review of the holdings after Vivendi walked away from the deal. It said it had received interest from “several parties” for the African assets and would consider any proposals.
Bharti has also shown interest in the Kuwaiti company. Bharti director Akhil Gupta said in October that “if an opportunity about Zain comes, I am not saying we are not interested or not looking at it.”
Bharti previously tried to expand into Africa by merging with South Africa’s MTN Group Ltd., but that deal fell apart for the second time amid political pressure in September.
Zain has more than 70 million active customers across 23 countries.
Simonian said about 42 million of those are based in Africa. Zain counts about 30 million subscribers in the Middle East, but those customers are far more lucrative on average, he said.
In Africa, it operates in Burkina Faso, Chad, the Republic of Congo, the Democratic Republic of Congo, Gabon, Ghana, Kenya, Malawi, Madagascar, Morocco, Niger, Nigeria, Sierra Leone, Sudan, Tanzania, Uganda and Zambia.
Source: AP