Bharti Airtel Limited, India's largest telecom service provider, is all set to acquire the African assets of Gulf telecom major Zain. Bharti on Monday said it has entered into exclusive talks with Zain to acquire all of the latter's African assets, potentially worth around $10.7 billion.

The transaction does not include Zain's operations in Morocco and Sudan and remains subject to due diligence, customary regulatory approvals and signing of final transaction documentation, Bharti said.

In a separate announcement, Zain also confirmed that its board has agreed to enter into exclusive talks with Bharti over the sale of its African assets.

The exclusivity period will end on 25 March, Bharti Airtel said in a statement. "There can be no assurance that a transaction will be consummated," Bharti added.

Bharti is expected to discuss ways of financing the deal and the company said it would make further announcements in due course.

Zain has over 70 million customers spread across Africa and the Middle East - with about 49 million in Africa alone - and Bharti is reported to have sought to acquire most of Zain's African assets.

Zain has operations in 17 African countries, including Morocco and Nigeria.

Bharti's bid for the Zain stake comes after merger talks with South Africa's MTN Group twice fell through in the past.

Zain has cumulative debt of around $6 billion and an acquisition of Zain would increase Bhart's debt burden, according to analysts.

Bharti's own debt of around Rs10,600 crore ($2.29 billion) as of end-December 2009 is also expected to rise to around Rs12,000 crore ($2.59 billion) by the end of the current fiscal.

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. Last month, it created a special international division to scout assets abroad and completed one major deal, agreeing to buy a 70 per cent stake in Bangladesh's Warid Telecom for an initial investment of $300 million.

Bharti said its international business group would give the company enhanced focus on international expansion beyond India and South Asia.

Manoj Kohli is heading the group as CEO (international) while joint MD Sanjay Kapoor is promoted as CEO of Bharti Airtel (India and South Asia).