Monster Bharti, Zain deal confirmed

We said it was a done deal and it is. On Tuesday afternoon Zain announced the $10.7bn sale of its African operations (excluding Morocco and Sudan) to Indian carrier Bharti Airtel.

As a result of the acquisition, Bharti’s total customer base will increase to around 179 million subscribers in 18 countries. Zain, on the other hand, will refocus on its “highly cash generative operations” in the Middle East and will substantially improve its balance sheet via the deal.

The nuts and bolts of the transaction implies an equity value of $9bn, which will be fully satisfied in cash, of which $8.3bn will be paid upon closing and $700m will be paid one year from closing. Bharti will also assume $1.7bn of consolidated debt obligations.

Zain shareholders, which were probably growing impatient, will benefit from the deal as Zain intends to distribute “a large proportion of the upfront net proceeds” to shareholders in the form of dividends.

Sunil Bharti Mittal, chairman and managing director of Bharti Airtel said: “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.”

AfricaCom 2010, takes place in Cape Town, November 10-11