Is Zain Africa worth US$12Bln? YES, it seems.

Reading this week’s literature regarding the Bharti – Zain deal, I have to finally answer to the question raised in this blog some months ago. While we were convinced that a US$12 Bln valuation would be too much for just Zain Africa (regardless the fact that we also believe that Africa is the next telecom opportunity), the answer to the question is clear: Yes. It is worth 10.7 (if we exclude the operations take out of the deal, the figure remains correct) as someone has decided to pay that money for it.

Good luck!. Best regards, CVA.

Bharti finalizes purchase of Zain Africa
India’s leading cellco Bharti Airtel has become the fifth largest mobile operator in the world, signing a “legally binding definitive agreement” to acquire the African operations of the Kuwait-based Zain Group. The deal, valued at $10.7bn, is third time lucky for Bharti, which had twice before tried to make a major African acquisition to expand its reach and scale, and offset wafer-thin margins at home. Its prey on those two occasions was MTN, but talks collapsed on ownership structure, price and brand sharing.

Bharti is paying $9bn, and taking on $1.7bn in debt, for Zain Africa, which has operations in 15 markets (all Zain’s operations in the continent except Sudan and Morocco, whose north African/Muslim nature keeps them within the Middle Eastern firm’s core group).

Bharti’s new units will have a total of 42m customers and span Burkina Faso, Chad, Congo Brazzaville, DRC, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia. These join Bharti’s existing units in India, Sri Lanka and Bangladesh to create a total footprint of almost 180m. Almost 70% of these will still be in its home market, where it has a base of nearly 125m.