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There Could Be Some Truth In Bharti-Zain Story: Experts

By Pallavi S

  • 16 Aug 2008

Even as it backed out of the proposed deal with MTN (which is now being pursued by Reliance Communications), Bharti Airtel could have initiated negotiations with $5.9 billion Kuwaiti telecom major Zain for a possible deal. While the company has denied that it was in talks for any acquisition or merger with Zain, indusry sources contend that there could be some truth in the story. Now that RCOM is nearing a deal with MTN, Bharti could be under pressure to gain size and it’s likely the Delhi-based company is in a hurry to find a global partner.

Apparently, Bharti has identified a group of target companies in which Zain was the second name after MTN, according to a report in The Financial Express. However, Bharti is on the gaurd this time after the MTN deal came unstuck.

Zain is present in seven Middle-East countries and 15 Sub-Saharan African countries. It has a combined subscriber base of 45.7 million. With a market cap of around $25.8 billion it is a relatively smaller in size than Bharti.

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If Bharti is successful in acquiring Zain, it would increase its user base by almost 70 per cent in one shot giving it a combined subscriber base of over 111 million customers which can still keep it at a respectable level if rival Reliance Communications manages to strike a deal with MTN.

Zain, along with Egypt’s Orasom, are the main rivals to South Africa’s MTN in Africa and West Asia. Zain began its African operations by acquiring Celtel in 2005 for $3.4 billion for which it had entered into a bidding war with MTN.

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