India's largest telecom company Bharti Airtel today said that it had closed its $10.7-billion acquisition of Kuwait's Mobile Telecommunications Co, also known as Zain, becoming the world's fifth largest mobile phone services company.
The Zain acquisition will be an Indian company's second-largest overseas acquisition after Tata Steel's $12.11 billion acquisition of Anglo Dutch steel maker Corus in 2007, which catapulted it to the world's fifth-largest steel maker.
Announcing the closure of the deal at a press briefing in New Delhi today, Bharti founder and chairman, Sunil Mittal said, "We are delighted at the closure of this transformational deal for India and Bharti Airtel. The transaction is the largest ever cross-border deal in an emerging market and will result in combined revenues of about $13 billion."
The deal was closed after Bharti deposited $400 million into the Kuwaiti firm's accounts and the remaining $700 million will be given to Zain a year after the closing, as agreed by the two telcos.
The closure also implies that Bharti has received all necessary approvals from the regulators and governments of the15 nations that Zain operates in.
Bharti will now have 180 million subscribers in 18 countries spread across Asia and Africa, and will be the world's fifth largest mobile network operator after China Mobile, Vodafone, Telefonica and America Movil Group.
But at the fast rate that Bharti is increasing its subscriber base in India, it is well positioned to overtake Telefonica's 202 million subscriber base and America Movil's 186 million, to become the world's third-largest mobile operator.
The countries in which Bharti can operate through Zain's acquisition are - Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda, and Zambia.
Zain is the market leader in 10 of the 15 countries and second in four countries, apart from being a market leader in India. Bharti also operates in Sri Lanka, Bangladesh and Seychelles.
Bharti's bid for the Zain stake comes after merger talks with South Africa's MTN Group fell through twice in the past.
Major global telecom firms see Africa as the last frontier for business expansion. Mobile penetration in most of Africa remains low, but the advances in mobile technology have brought it within reach for many African consumers.
Bharti has been gearing up for a major expansion into emerging markets. In January 2010, it created a special international division to scout for overseas assets and completed one major deal pror to Zain, by buying a 70-per cent stake in Bangladesh's Warid Telecom for an initial investment of $300 million.
In February, Bharti, which is 32-per cent owned by Singapore Telecommunications, entered into exclusive talks with Zain to acquire all of the latter's African assets, worth around $10.7 billion, including the assumption of $1.7 billion debt. (See: Bharti all set to acquire Zain Africa BV)
Mittal said that Manoj Kohli, CEO of international operations and joint MD, Bharti Airtel, will relocate to Nairobi in the coming few days to oversee the integration.