Update: An ownership dispute between Econet Wireless and Zain has come in the way of Airtel’s plans to acquire the latter’s African operations, with Business World reporting Econet Chief Executive Officer, the influential Strive Masiyiwa) as saying, “Zain Nigeria is not for sale”.

The Nigerian network is run by Celtel, which was acquired by Zain in 2005. Zain consequently acquired other telcos in Africa to build its pan-continent presence. Celtel’s network covered 13 nations in the continent, and was valued at $10 billion in August 2009 when RCOM wasreportedly in talks to buy the division from Zain. Celtel Nigeria BV is a key asset and Zain has invested $435 million over the past year in it.

Earlier Post (February 15, 2010): “Now that he speaks a neighbouring language, his competitors have reason to be Warid (worried)” – that was a clue at a B-school quiz held recently, referring to Sunil Bharti Mittal’s takeover of Bangladeshi telco Warid last month. Mittal is now yearning to speak more languages: a notice to the BSE announces its intent to acquire Zain Telecom, or Mobile Telecommunications Company K.S.C, for its African unit.

Zain serves some 41.897 million mobile connections in Africa. It has a total of 71.8 million mobile customers in 24 countries in the Middle East and Africa. For more detail: September 2009 mobile connections. The notice reads,

“Bharti Airtel Limited and Zain have agreed to enter into exclusive discussions until 25 March 2010 for the acquisition of Zain’s African unit (Zain Africa BV) based on an enterprise value of $10.7 billion. This potential 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. There can be no assurance that a transaction will be consummated.  Further announcements will be made in due course.”

Zain has confirmed it has received an offer in relation to its operations in Africa excluding Morocco and Sudan. The company’s board of directors were to have discussed the proposal on Sunday, February 14, 2010.  Zawya Dow-Jones quotes Simon Simonian, a telecom analyst at Dubai-based Shuaa Capital as saying, “If the deal goes through at $10.7 billion, it’s a good deal. Bharti will be paying 10 times the Ebitda for Africa.”

Download: Zain Q3 2009 presentation

The cautious tone is from Airtel’s long drawn out and failed attempt to merge with the MTN Group. The buzz that Indian PSUs BSNL and MTNL were planning to acquire a stake in the Kuwait-based Zain Telecom has tapered off and Bharti Airtel has seized the moment to evince interest in Zain.

Success so far in foraying into Africa have been only Essar Teleholdings’, which has established itself at Kenya, Congo and Uganda through joint ventures and the acquisition of Dhabi group owned Warid Uganda and Congo-Brazaville networks in November.

Timeline

September 2, 2008 – Zain showed interest in acquiring a strategic stake in Essar group owned Loop Telecom. (more)

August 20, 2009Reliance Communications (RCOM) entered into talks with Zain for acquiring its African assets. (more)

September 10, 2009 – PSUs BSNL and MTNL were mulling  joining a consortium led by Delhi based Vavasi Group that is buying a 46% stake in Zain, but no confirmation was issued. (more)

October 8, 2009 –  Vavasi group said it would share a majority stake with BSNL or MTNL and that it was  in discussions with the Kuwait Government.

October 14, 2009 – Backed by the minister for IT and telecommunications A.Raja, BSNL & MTNL proceed with the $14 million deal. (more)

January 11, 2010 – Zain’s largest shareholder—Al-Kharafi group – said the deal with Vavasi Group led consortium would take more time to materialise.

Zain

Zain suffered a drop of 53 percent in profit for the September quarter due to currency fluctuations and increased financing costs for its network expansion. Net income declined to 41.2 million dinars from 87.2 million dinars YOY. The other operators in the region are Uganda Telecom, MTN, Abu Dhabi-based Warid Telecom and France Telecom’s Orange Uganda.

Update: New CEO

Nabeel Bin Salamah, who was previously Kuwait’s Minister of Communication, Electricity and Water, has been appointed as Zain’s new CEO following the resignation of Dr Saad Al Barrak on February 4, 2010, according to Mobile Business Briefing. Salamah’s appointment is effective from February 14, 2010.

Related

MTNL & BSNL Proceed With Zain Deal; More About Vavasi

– All Africa related telecom posts on Medianama