Bharti-Zain deal finally sealed

Press Trust of India, March 30, 2010 (New Delhi)

In the largest ever telecom takeover by an Indian firm, Bharti Airtel on Tuesday signed a deal with
Kuwait-based Zain Telecom to buy its African business for $10.7 billion (about Rs. 48,000 crore).

Announcing the deal, Sunil Mittal said, "This agreement is a landmark for global telecom industry and
game changer for Bharti.

"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,” said Mittal.

“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," he said. (Read: Manoj Kohli to head Bharti's Africa operations: Mittal )

"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," he further
added.

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 telecommunications across the continent."

The acquisition, the second largest by an Indian entity after Tatas' Corus deal, would make Sunil Mittal-
led Bharti the world's seventh largest mobile operator with a total subscriber base of about 179 million.
It would have estimated revenues of $13 billion. (Read: Bharti-Zain deal 2nd largest involving Indian
firm)

With this, Bharti has fulfilled its ambition of entering Africa, where it failed twice in the last two year's
to forge a $23 billion merger deal with South African telecom giant MTN. (Read: Bharti-Zain deal will
promote Brand India: India Inc)

Zain has operations in 17 African countries and Bharti has acquired all, but those in Sudan and Morocco.

The African business would widen Bharti's reach, which was hitherto restricted to Asia and Indian
Ocean region with businesses in Sri Lanka, Bangladesh and Seychelles. (Read: Bharti-Zain deal a move
in right direction: Khurshid)

Of the $10.7 billion enterprise value of Zain, Bharti will be paying $8.3 billion upfront and $700 million
after a year. It would also take over approximately $1.7 billion of Zain's debts as on December 31,
2009.

Of the $8.3 billion paid to Zain, Bharti has raised the debt from a consortium of foreign banks and State
Bank of India with the lead-arranger and lead-advisor Standard Chartered Bank committing the highest
amount -- $1.3 billion followed by $0.9 billion by Barclays.

The rest of the co-advisors -- ANZ, BNP, Bank of America-Merrill Lynch, Credit Agricole CIB, DBS, HSBC,
Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation -- have allocated $600 million
each.

State Bank of India has agreed up to one billion dollar loan in rupee terms.
(Also read: Bharti breaks African jinx)

Chronology of Airtel's efforts to enter African market

* May 5, 2008: Bharti announces exploratory talks with South Africa-based MTN

* May 24, 2008: Bharti disengages from discussions with MTN on issues related to deal structure

* May 25, 2009: MTN and Bharti announce they have renewed talks for potential merger, a year after
the first attempt fell through

* July 31, 2009: First deadline for exclusivity talks period ends

* August 3, 2009: Bharti says exclusivity period extended till August 31, amid reports of various
unresolved issues, including MTN shareholders' concerns on deal pricing

* August 20, 2009: Deadline for exclusive talks extended till September 30. Later, reports appear on
various thorny issues, including South African government's desire for dual listing

* September 30, 2009: Talks on the $23-billion merger deal between Bharti and MTN called off, on the
last day of the third deadline for the exclusive discussions

* February 14, 2010: Zain says its board would meet to discuss an offer for its African assets, excluding
Sudan and Morocco

* February 15, 2010: Bharti enters into exclusive talks with Zain for acquiring its African operations
based on an enterprise value of $10.7 billion. The discussions go on till March 25

* March 21, 2010: Bharti Airtel says has tied up $8.3 billion from a clutch of foreign banks and State
Bank of India to fund the acquisition of Zain telecom's African assets.

* March 25, 2010: Bharti completes due diligence of Zain Telecom's operations in Africa other than in
Sudan and Morocco; says definite agreements to be signed soon.

* March 30, 2010: Bharti Airtel signs deal to buy African assets of Kuwait-based Zain Telecom for $10.7
billion.

South Africa: Bharti-Zain Deal Boosts Sub-Saharan Merger Activity

Johannesburg — MERGERS and acquisition activity in sub-Saharan Africa has bounced back strongly
this year, and has almost doubled from a year earlier, Thomson Reuters research indicates.
However, like mergers and acquisitions statistics in SA, the trends can be obscured by large transactions,
and a single deal - the purchase of cellphone company Zain's African interests by Indian telecoms group
Bharti AirTel - dominates the data.
Bharti's purchase of Zain for 10,7bn has dramatically inflated the mergers and acquisitions year- to-date
figures, but, even without this deal, evidence of a broader resurgence is visible.
Thomson Reuters puts year- to-date activity at 22,5bn - about two-thirds of the total for last year after only
five months.
Generally, mergers and acquisitions activity in sub-Saharan Africa followed the international trend down
last year and the year before. However, the extent was not as pronounced, especially last year, with
activity falling from 38bn in 2007, to 23bn in 2008 and 17bn last year.
While mergers and acquisitions activity is showing signs of rebounding, equity and debt issuance are
lagging, with both down about 2% in the year to date. Both figures can be volatile, however, and this
year's debt issuance is already almost double what it was in 2008, a year famed for credit scarcity.
Although much has been made of Chinese interest in Africa, the figures suggest Indian interest is as
intense, with three of the 10 largest acquisitions and about half of the total deals by value going to Indian
companies.
South African companies are no slouches when it comes to continental mergers and acquisitions activity,
accounting for 22% of the value of the deals this year. China comes in fourth, behind the UK this year at
least.
As the largest deal was Bharti's purchase of Zain's African business, it is no surprise that telecoms was
the leading sector.
The research says the purpose of that deal was to strengthen Bharti's market position. Chairman and MD
Sunil Mittal said expansion opportunities were the motivation, telling the press at the time that he was
"confident that Zain will become a major telecom player in Africa".
SA remains by far the most targeted country for mergers and acquisitions activity on the continent, with
75% of the deals transacted locally. However, notable increases are apparent in a range of other
countries, with Uganda, Guinea, Angola and Namibia registering between 4% and 7% of the deals done
so far this year.
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Although marginally down on last year, debt issuance is maintaining a general upward swing in sub-
Saharan Africa. The 2008 year bombed, but this year looks on track to match last year, the second best
on the continent.
African debt issuance is dominated by South African government debt, but the African Development Bank
and Nigerian commercial banks are significant players. Total debt issues so far this year amount to 4,6bn
Equity issuance in Africa is much more modest than debt issuance and has been sluggish, with only
2,2bn issued this year, about half of it in SA.
The fee tables, which show which banks are managing corporate activity, suggest Morgan Stanley has
been the dominant transactional bank in Africa this year, with 11% of the market. US rival JPMorgan
came in second with 8,2% of the overall market
Driven by Bharti Airtel’s $10.7- billion takeover deal for the African assets of Kuwait’s Zain Telecom, the total value of
merger and India first quarter of 2010 has nearly quadrupled to a whopping $19 billion.

According to VCCEdge, the financial research platform of VCCircle, the value of merger and acquisition (M&A) deals
in India rose to $19.20 billion in the first quarter of this year, up from $5.19 billion a year ago.

The number of domestic transactions doubled from 39 deals worth $2.27 billion in Q1 of 2009 to 80 deals worth $4.06
billion in the same period of this year, VCCEdge said.

Further, there were 51 outbound deals in the period under consideration, while the figure stood at 24 a year ago. In
terms of value, the increase was more than seven times, primarily due to the Bharti - Zain deal.

The number of inbound deals also rose to 29 in first three months of 2010 from 24 deals in the same period of 2009.

Going forward, the value and volume of Indian M&A activity is likely to increase as investor confidence and liquidity
returns to the market.

“Strategic investors will try to take advantage of lower valuations in the midst of the crisis and strengthen
their position across various sectors,” the report said.

A sector wise analysis shows that telecommunication services, energy and healthcare were the most targeted sectors
as these segments attracted deals worth $14.03 billion, $1.17 billion and $961 million respectively.

Big ticket deals dominated the M&A space this year as large deals (worth $100 million and above) accounted for as
much as 90 per cent of total capital invested in the first quarter this year.

The top two deals in the first three months of this year were the $10.7-billion acquisition of Zain’s African operations
by Bharti Airtel, followed by the $1.8 billion acquisition of tower assets of Aircel by GTL Infrastructure.

Other major deals in the period under consideration include Fortis Healthcare’ $685-million investment in Parkway
Holdings, Essar Group’s $600 million acquisition of Trinity Coal Corp and Telenor ASA’s $433 million stake buy in
Unitech Wireless.
The five major deals in the first quarter of this year accounted for over 71 per cent of the total M&A deals, the report
added.

Bharti-Zain Deal Boosts Sub-Saharan Merger

Activity
Posted on: Tue, 01 Jun 2010 10:47:58 EDT

Symbols: TRIN

Johannesburg, Jun 01, 2010 (Business Day/All Africa Global Media via COMTEX) --

MERGERS and acquisition activity in sub-Saharan Africa has bounced back strongly this year, and has almost
doubled from a year earlier, Thomson Reuters research indicates.
However, like mergers and acquisitions statistics in SA, the trends can be obscured by large transactions, and a
single deal - the purchase of cellphone company Zain's African interests by Indian telecoms group Bharti AirTel -
dominates the data.
Bharti's purchase of Zain for 10,7bn has dramatically inflated the mergers and acquisitions year- to-date figures, but,
even without this deal, evidence of a broader resurgence is visible.
Thomson Reuters puts year- to-date activity at 22,5bn - about two-thirds of the total for last year after only five
months.
Generally, mergers and acquisitions activity in sub-Saharan Africa followed the international trend down last year and
the year before. However, the extent was not as pronounced, especially last year, with activity falling from 38bn in
2007, to 23bn in 2008 and 17bn last year.
While mergers and acquisitions activity is showing signs of rebounding, equity and debt issuance are lagging, with
both down about 2% in the year to date. Both figures can be volatile, however, and this year's debt issuance is
already almost double what it was in 2008, a year famed for credit scarcity.
Although much has been made of Chinese interest in Africa, the figures suggest Indian interest is as intense, with
three of the 10 largest acquisitions and about half of the total deals by value going to Indian companies.
South African companies are no slouches when it comes to continental mergers and acquisitions activity, accounting
for 22% of the value of the deals this year. China comes in fourth, behind the UK this year at least.
As the largest deal was Bharti's purchase of Zain's African business, it is no surprise that telecoms was the leading
sector.
The research says the purpose of that deal was to strengthen Bharti's market position. Chairman and MD Sunil Mittal
said expansion opportunities were the motivation, telling the press at the time that he was "confident that Zain will
become a major telecom player in Africa".
SA remains by far the most targeted country for mergers and acquisitions activity on the continent, with 75% of the
deals transacted locally. However, notable increases are apparent in a range of other countries, with Uganda,
Guinea, Angola and Namibia registering between 4% and 7% of the deals done so far this year.
Although marginally down on last year, debt issuance is maintaining a general upward swing in sub-Saharan Africa.
The 2008 year bombed, but this year looks on track to match last year, the second best on the continent.
African debt issuance is dominated by South African government debt, but the African Development Bank and
Nigerian commercial banks are significant players. Total debt issues so far this year amount to 4,6bn
Equity issuance in Africa is much more modest than debt issuance and has been sluggish, with only 2,2bn issued this
year, about half of it in SA.
The fee tables, which show which banks are managing corporate activity, suggest Morgan Stanley has been the
dominant transactional bank in Africa this year, with 11% of the market. US rival JPMorgan came in second with 8,2%
of the overall market

Bharti-Zain deal: Will it benefit Sunil Mittal?

Updated on Thursday, March 25, 2010, 10:57

Tags: Bharti-Zain deal, African telecom market, Sunil Mittal

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Rijo Jacob Abraham

Sunil Mittal can now have plenty of meat to eat as the Kuwait-based Zain Telecom gave its nod to
the transaction with Bharti. The Bharti group chairman, who is in the “due diligence” process for
acquiring the African assets of Kuwait’s Zain telecom, avoids meat whenever his group closes in to
making business deals. He had done the same twice last year when Bharti was in acquisition talks
with South Africa’s MTN. But his spare diet didn’t bear fruit after the MTN deal fell through.

The $24 billion deal was an ambitious one, no doubt. It would have surpassed Tata acquisition of
Corus by almost double. The problem, Bharti said in a press release, was regulatory approvals from
the South African side.

The talks went on smoothly from May 2008, when they hit on a roadblock in August -- dual listing the
company in stock exchanges of two countries. The actual problem was politics, what some columnist
call “economic nationalism.” The South African government did not want their flagship corporate firm
to lose it national identity.

Mittal’s months of penance failed. But he should persist. Market data shows why he is not giving up,
and why he should not. Airtel’s profit margins have fallen lowest in three years in the quarter ended
December 2009. ARPU or Average Revenue Per User has fallen drastically to around Rs 24, thanks
to the increased mobile subscription rates.

India has the world’s largest growing mobile markets -- the number of cell phone connections stood
at 525 million in December 2009. India has around 13 cell phone operators now, with the latest
entrants being Telenor and Sestemia (which operates as MTS).

Stiff competition has swamped the call charges in the country. Further, to boost the rural penetration
of cell phones, the government had lowered the mobile termination charge (MTC) -- the charge one
mobile operator pays to another for each call made to it. Bharti stands to lose the greatest from this
move.

With Indian markets showing early signs of saturation, Bharti has few options but to look overseas.
According to market analysts, the Indian telecom giant’s operations in Sychelles, Jersey and
Guernsey (Channel Island), Sri Lanka and the recent acquisition of Warid Telecom in Bangladesh
are just not good enough to increase profits. It needs bigger geographies, like that of he MTN or the
Zain with growth potential.

The Zain deal

With the global economy emerging from recession, valuations of troubled assets have increased and
loss-making companies like Zain Africa BV (Zain’s Africa operations) are willing to sell them. Merger
and acquisition opportunities have widened compared to the past one-and-a-half years.

On February 15, Bharti Airtel announced the USD 10.7-billion deal for acquiring Zain’s 15 operations
in Africa.

The deal, Bharti Airtel clarified, includes a $1.7 billion debt assumption, which will be figured into the
enterprise value. In this all-cash acquisition, $700 million will be paid a year after the deal is inked.
Further the deal carries a penalty of $150 million for the parties if either fails to complete the deal.

Mittal’s ‘Minute’s factory’

Africa is too good an opportunity for Mittal. With a population of a billion spread out in 56 countries,
Africa’s cell phone penetration is comparable to that of India 10 years back. Mittal’s “minute’s
factory”, what he refers to as low-cost, high volume model, which made him market leader with
should work in Africa as well. The demand for mobile services is growing at a rate of 25 percent
across these countries.
Bharti signs $9 bn deal for Zain Africa ops
Makes grand entry into Africa's telecom market; this is the largest overseas acquisition of assets in
Africa by an Indian company
Wednesday, March 31, 2010

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AMSTERDAM, THE NETHERLANDS: India's top private telecom company Bharti
Airtelannounced on Tuesday night the inking of a $10.7 billion deal to acquire the African
assets of Kuwait's Zain in what will make the combined entity the world's fifth largest
mobile telephony firm.
This is the largest overseas acquisition of assets in Africa by an Indian company, even
though it does not cover the assets of Zain in Sudan and Morocco.
The deal was signed here as this Dutch capital is the corporate headquarters for Zain's
African business though the company itself is based in Kuwait and listed on its stock
exchange.
Chairman Sunil Mittal, on behalf of Bharti and his counterpart from Zain, Asaad Al Banwan,
signed the legally binding definitive agreement.
"This agreement is a landmark for the global telecom industry and a game changer for
Bharti. 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 said.
Reacting on the signing of the Bharti-Zain deal, FICCI Secretary General Amit Mitra said:
"This is the first time that an Indian telecom firm has gone ahead and acquired a global
major. This move by the Bharti group will enhance India's brand equity and add a new
dimension to the India growth story. It will also prove to be a milestone in India's economic
relations with Africa and further deepen the economic engagement between our two sides."
Post the deal, Bharti will become the world's fifth largest wireless company with operations
across 18 countries. Its total customer base will reach around 179 million, including Zain
Africa's mobile operations in 15 countries with over 42 million customers.
This was Bharti's third attempt to enter the largely untapped African market after failing to
enter into a merger pact with South Africa's MTN on two occasions. Africa accounts a little
over 60 percent of Zain's 71.8 million customers.
Bharti Airtel is among Asia's leading telecom service providers with operations in India, Sri
Lanka and Bangladesh. As on Jan 31, it had the largest market share of 23.33 percent in
India's mobile telephony segment with 121.71 million subscribers.
Some of the highlights of the deal with Zain are:
- Offer of $10.7 billion for Zain's assets
- Deal excludes Zain's operations in Morocco and Sudan
Bharti had late last year failed to strike a deal for the second time with MTN.
The MTN deal, worth some $24 billion in cash and equity, envisaged Bharti getting a 49-
percent stake in MTN, and the South African firm and its shareholders 36 percent equity in
the Indian telecom major. But it got stuck over policy issues.
Now, MTN will be a major competitor in the territories the Indian company is entering.