Third time lucky?

15 February 2010 By Una Galani Follow @ugalani

The Indian telco has long wanted to expand in emerging markets. It is offering to pay around 8 times EBITDA for the African assets of Kuwait’s Zain. This is in line with recent transactions, but Zain’s businesses need major investments. Bharti is taking risks to do a big deal.

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India's Bharti Airtel on Feb. 15 announced it has entered into exclusive talks to acquire the African mobile operations of Kuwait telecom operator Zain's for $10.7 billion. The operations in Morocco and Sudan are not included in the potential transaction, which is contingent on due diligence and regulatory approval. The exclusivity period will last until March 25.

Zain, which has operations across Africa and the Middle East, is 46 percent owned by the Kharafi Group. The familycontrolled conglomerate announced in 2009 that it was in talks to sell its holding to a consortium of Indian and Malaysian telecom operators.

The ruler of Kuwait also owns a 25 percent stake in Zain. Bharti is 30.4 percent owned by Singapore Telecom.

UBS is advising Zain. Standard Chartered is advising Bharti, according to a person close to the situation.

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