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Zain Africa in Bharti Airtel’s sights - for US$10.7 billion

Bharti Airtel has bid almost US$11 billion for Zain Africa. Negotiations around the bid will continue until 25 March - at present there is no guarantee that the current bid will be successful. It may well be the case that this week’s resignation by Zain CEO Dr Saad Al Barrak reflects a disagreement at board level regarding Bharti’s bid...

Bharti Airtel – India’s largest mobile operator – has made a US$10.7 billion bid for Zain’s African mobile businesses in its latest effort to expand outside its home market. Bharti has entered into exclusive discussions with Zain that will last until 25 March but gave no guarantees that a deal would be made. The deal will cover around 14 of Zain’s African subsidiaries but does not include its operations in Morocco and Sudan.

Bharti Airtel is no stranger to the African market. Her entry into market discussions with South Africa’s MTN twice led to deadlock and failure. What may well be playing a part in the bid is the resignation a few days ago of Zain CEO Dr Saad Al Barrak. Board members might have been more inclined to sell and distribute cash to share-holders than their CEO.

The new CEO of Zain is Nabil Bin Salama, former Kuwaiti Minister of Communication. There may well be a clash of commercial philosophies between the present and former CEOs.

As if the backdrop of Mobile World Congress has not lent enough intrigue to the bid, there is still the factor of the Kharafi Group, which is seeking to boost its existing share-holding in Zain to 46%. The bid by Bharti Airtel is considered on the low side - valuations of the relevant parts of Zain range from US%10-US$12 billion.

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