Zain announces the US$10.7 billion sale of its African operations to Bharti Airtel
Kuwait, 30 March 2010:
Further to the statement made on 25 March 2010, Mobile Telecommunications Company K.S.C (“Zain”) announces today the signing of definitive agreements for the sale of 100% of Zain Africa BV, its African business excluding its operations in Morocco and Sudan (”Zain Africa”), to Bharti Airtel Limited (“Bharti Airtel”), for an Enterprise Value of US$10.7 billion.
The transaction implies an equity value of US$9 billion and consideration will be fully satisfied in cash, of which US$8.3 billion will be paid upon closing and US$0.7 billion will be paid one year from closing. Bharti Airtel will assume US$1.7 billion of consolidated debt obligations.
Subject to shareholder approval, the size of available distributable reserves and the repayment of the US$4 billion Revolving Credit Facility, Zain intends to distribute a large proportion of the upfront net proceeds to shareholders in the form of dividends.
The transaction is expected to close as soon as reasonably practicable subject to the satisfaction of certain approvals.
Commenting on the transaction, Mr Asaad Al Banwan, Chairman, Zain Group, said: “Since we acquired Celtel in 2005, we have grown substantially to become one of Africa’s leading mobile operators, and we are proud of the contribution Zain Africa has made to the development of communications across the continent. This transaction crystallises the significant value we have created for our shareholders over the last 5 years."
Al Banwan added: “Bharti Airtel has a fantastic track record in running successful operations in the emerging markets and we are delighted that the African telecom operations that we so assiduously built are becoming part of such a committed and reputable telecom powerhouse. We wish Bharti Airtel all the very best for their future success in Africa.”
Mr. Nabeel Bin Salamah, CEO, Zain Group, said: "The transaction allows Zain to focus on its highly cash generative operations in the Middle East and to substantially improve its balance sheet. We are excited about the growth prospects of the Middle East and we believe Zain is well positioned to capture this opportunity.”
With this acquisition Bharti’s total customer base will increase to around 179 million in 18 countries. Bharti launched mobile services in India in 1995, Sri Lanka in 2009 and acquired Warid in Bangladesh in January 2010.
Mr. Sunil Bharti Mittal, Chairman and Managing Director, Bharti Airtel commented: “This agreement is a landmark for global telecom industry and game changer for Bharti Airtel. More importantly, this transaction is a pioneering step towards South-South cooperation and strengthening of ties between India and Africa. With this acquisition, Bharti Airtel will be transformed into a truly global telecom company with operations across 18 countries fulfilling our vision of building a world-class multinational.”
Mittal also noted: “We are excited at the growth opportunities in Africa, the continent of hope and opportunity. We believe that the strength of our brand and the historical Indian connect with Africa coupled with our unique business model will allow us to unlock the potential of these emerging markets. 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. I would also like to compliment the Zain group for building world-class operations in Africa and we have enjoyed working with them on this transaction.”
Mr Mittal further added, "The extremely tight time lines and the enormity of the task posed a real challenge. Bharti was able to achieve this important milestone through much hardwork and support from SingTel and the external advisors. Appreciation is in order for all the team members involved in this transaction."
UBS Investment Bank acted as lead financial advisor to Zain on this transaction. BNP Paribas acted as co-advisor to Zain in relation to this transaction.
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About Zain
Zain is a leading telecommunications operator across the Middle East and Africa providing mobile voice and data services to over 70 million active customers as at 30 September 2009 with a commercial presence in 23 countries. Zain is listed on the Kuwait Stock Exchange with a market capitalisation of over US$20 billion. Zain operates in the following countries: Bahrain, Burkina Faso, Chad, the Republic of the Congo, the Democratic Republic of the Congo, Gabon, Ghana, Iraq, Jordan, Kenya, Kuwait, Malawi, Madagascar, Niger, Nigeria, Saudi Arabia, Sierra Leone, Sudan, Tanzania, Uganda and Zambia. In Lebanon, the company manages ‘mtc-touch’ on behalf of the government. In Morocco, Zain owns 31% of Wana Telecom through a joint venture.
About Zain Africa
Zain Africa spans 15 countries across Africa serving 42 million customers and in 2009 generated proportionate EBITDA of US$958 million. Zain Africa has operations in Burkina Faso, Chad, the Republic of the Congo, the Democratic Republic of the Congo, Gabon, Ghana, Kenya, Malawi, Madagascar, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia.
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About Bharti Airtel Limited
Bharti Airtel Limited, a group company of Bharti Enterprises, is among Asia’s leading integrated telecom services providers with operations in India, Sri Lanka and Bangladesh. The company has an aggregate of around 137 million customers across its operations. Bharti Airtel has been ranked among the six best performing technology companies in the world by BusinessWeek.
Bharti Airtel is structured as four strategic business units - Mobile, Telemedia, Enterprise and Digital TV. The mobile business offers services in India, Sri Lanka and Bangladesh. The Telemedia business provides broadband, IPTV and telephone services in 94 Indian cities. The Enterprise business provides end-to-end telecom solutions to corporate customers and national and international long distance services to carriers. The Digital TV business provides DTH services across India. All these services are provided under the Airtel brand. Airtel’s national high-speed optic fiber network currently spans over 118,337 Rkms across India. Airtel's international network infrastructure includes ownership of the i2i submarine cable system and consortium ownership in five global undersea cable systems, SEA-ME-WE 4, EIG, I-ME-WE, AAG and UNITY. For more information, visit www.airtel.in
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