And so it begins. Bharti Airtel, having announced that it had inked a legally binding agreement to acquire Zain Africa, will now have to go from regulator to regulator for approvals for providing telecom services to 42 million of Zain’s subscribers in 15 countries. The deal makes Airtel the worlds fifth largest wireless company with 179 million subscribers, a majority of them still in India’s increasingly competitive market. Manoj Kohli, who heads Bharti’s international operations, will lead the company’s African safari.

This is Bharti’s second acquisition this year (the first was another struggling operator – Warid in Bangladesh), and it gives them mobile operations in 15 countries – Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda, and Zambia. Zain’s operations in Sudan and Morocco are not a part of this deal. What the company is perhaps eying, is the opportunity in increasing the mobile penetration that currently is at approximately 32%, as well as the minutes of use. The company will have its hands full, and given the scale of the acquisition and the debt that the company has raised, this is likely to be its last acquisition for quite a while.

Zain Africa has an enterprise value of $10.7 billion, and with 42 million customers, that’s a value of $254.76 per customer. Airtel’s CMD Sunil Bharti Mittal told the Economic Times that Zain has a topline of $4 billion, and EBITDA of $1.2 billion.  Taking on an estimated $1.7 billion of Zain’s debt, Airtel will pay $8.3 billion after the closing of the deal (probably after regulatory approvals have been inked), and $700 million to be paid one year later.

But before the money is paid, at least two sticky situations to deal with; one wonders if there will be others as well: Reuters had reported on Monday that the Gabon’s telecom regulator disapproved of the sale of Zain’s assets to Airtel. As of September 30th 2009, Gabon’s mobile penetration was at 123%, and an ARPU of $25. Nigeria, with mobile penetration of 45% and ARPU of $5, is a market where Zain (hence Bharti) has 65.7% stake in the operations, but the ownership has been under arbitration; South Africa based Econet Wireless believes it has the first right to buy Zain Nigeria, in which it owns 5 percent.

Airtel Closes In On Zain Acquisition: $8.3Bn Financing Oversubscribed
Airtel-Zain: Payout Of $9 Billion Expected; $255.38 Per Customer
Updated: Airtel Acquires 70% In Warid Telecom; Warid Makeover?