All signals point to an imminent sale of Zain Africa to Bharti this week. Several reports confirm that Bharti’s board met this Saturday and approved of the plan to acquire Zain Africa ahead of the March 25 exclusive talks deadline. Zain’s sell curse and Bharti’s buy curse will finally come to an end. Bharti failed in two previous attempts to acquire Africa’s largest operator MTN. Zain has also failed to sell Zain Africa and itself in the past.
Last week reports suggested complications surfaced in relation to Zain’s Nigeria operations. Econet Wireless Holdings is disputing control of Zain’s unit in Nigeria and it is particularly significant as Nigeria contributes 21% of Zain’s earnings. However, such concerns were assuaged as there are indications Bharti Airtel may simply ask Zain for legal protection from a dispute in Nigeria. Further, Bharti might put part of the purchase price in an escrow account to protect it from potential problems.
Sources even indicate that Bharti Airtel has issued a term sheet to banks to raise up to US$ 8.5 bn in offshore loans to fund the Zain acquisition deal. Bharti is said to have received “strong response” from offshore lenders. According to analysts, the acquisition of Zain Africa would increase Bharti’s debt from 0.4 times EBITDA (earnings before interest, tax, depreciation and amortization) to around 2.5 times. However, this would still be a lower debt multiple that that of its Indian competitor Reliance Telecom.END
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