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Bharti board clears Zain offer
Source: BI-ME with Bloomberg , Author: Posted by BI-ME staff
Posted: Sat March 20, 2010 10:57 pm
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INTERNATIONAL. Bharti Airtel intends to make a formal offer next week for the purchase of Zain’s African wireless assets after its board today approved the US$9 billion bid, reported Bloomberg, citing two people with knowledge of the negotiations.

Zain, Kuwait’s biggest phone company, may be asked to provide legal protection from a dispute in Nigeria, one of the people said, declining to be identified because the discussions aren’t public.

The board didn’t specifically ask for this protection, and was satisfied with the proposals that Bharti management made with regards to Nigeria, the second person said.

Bharti and Zain are in exclusive talks until March 25 to complete a transaction that would give India’s largest wireless carrier 42 million new subscribers in 15 African countries.

Bharti has sought overseas businesses as competition at home has reduced call rates for many of its 122 million Indian subscribers to as little as half a U.S. cent a minute. This is Bharti’s third attempt to enter Africa, after being thwarted twice in efforts to merge with South Africa’s MTN Group Ltd.

Zain's board has approved the sale to Bharti, which is 30%-owned by Singapore Telecommunications Ltd.

Africa represents about 62% of Zain's 64.7 million customers, but only 15% of group net profit.

Africa is seen as a natural fit for Bharti, which has thrived in an Indian market with low incomes and tariffs and a heavily rural population -- characteristics shared by African countries.

Mobile phone penetration in half of Africa's countries was below 40% as of August, and a dozen countries had penetration below 30%, according to a research report.

Zain pulled back from an expansion spree last year and rejected an offer from France's Vivendi for its African assets. It then halted talks to sell the assets to appease potential buyers of a 46% stake in the parent company.

Econet Wireless Holdings Ltd., based in a suburb of Johannesburg, is disputing control of Zain’s unit in Nigeria.

 

 

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