The board of Zain approved the sale of the company’s assets in sub-Saharan Africa to India’s Bharti Airtel for US$10.7bn in a meeting that took place earlier today.
The Kuwaiti telco needs the money to repair its overleveraged balance sheet, which became…
The board of Zain approved the sale of the company’s assets in sub-Saharan Africa to India’s Bharti Airtel for US$10.7bn in a meeting that took place earlier today.
The Kuwaiti telco needs the money to repair its overleveraged balance sheet, which became swollen thanks to a string of acquisitions between 2004 and 2007.
Zain and Bharti Airtel now have 21 days to prepare the documentation to complete the sale.
However, the pair may reach agreement before then as the Indian operator has already raised US$8.3bn in loans to complete the deal which includes the assumption of US$1.7bn of existing Zain debt.
Bharti will acquire 15 sub-Saharan operators under the deal in Burkina Faso, Chad, Congo Brazzaville, the Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia.
Zain will subsequently only operate in the Arab countries of Bahrain, Iraq, Jordan, Kuwait, Morocco, Saudi Arabia and Sudan.
The smaller group may benefit because most of its seven remaining operations are stronger than the assets that it has now agreed to sell, said Simon Simonian, telecoms analyst at Shuaa Capital, a UAE-based bank.
“Zain is retrenching to the Middle East where it’s very strong. It’s number one in Jordan, Sudan and Iraq, and it’s neck-and-neck with Batelco in Bahrain,” Simonian said.
Zain’s operation in Saudi Arabia is less healthy. The management of Zain Saudi Arabia announced plans in the middle of March to raise US$500m through a rights issue and to convert a further US$500m of shareholder loans into equity.
Both the rights issue and the debt conversion will take place before the end of 2010.
Zain declined to comment.