KUWAIT CITY, Jun 8 – Kuwait\’s Zain telecom said on Tuesday it has completed the sale of its operations in 15 African nations to India\’s Bharti Airtel for 10.7 billion dollars (9 billion euros).
Kuwait\’s largest mobile operator said it has already received 7.87 billion dollars as part of the "largest telecom deal in Africa and the Middle East," and will receive 400 million dollars more within 12 months, after completing "certain official requirements."
Zain will also receive another 700 million dollars one year from now.
"I announce here today that we have completed the deal to sell African operations to Bharti Airtel," Zain CEO Nabil bin Salamah told a news conference. The sale does not include the company\’s units in Sudan and Morocco.
The value of the deal which was signed on March 30 includes 1.7 billion dollars of debt that will be assumed by Bharti Airtel.
Zain, in which the Kuwaiti government holds a 24.6 percent stake, expects to post a net profit of 3.3 billion dollars from the sale.
"This is a historic deal. It is the largest transaction in the telecom sector in Africa and the Middle East," Zain chairman Asaad al-Banwan said in a statement.
Mr Salamah said Zain repaid on Tuesday a four-billion-dollar revolving credit facility to over 60 local and international banks after receiving the value of the deal.
He also said that Zain and Bharti Airtel, India\’s largest phone operator, on Tuesday "completed all the procedures regarding the transfer of assets," but added that certain "small" official requirements remained.
"We have completed the transfer of stocks in the 15 African units from Zain to Bharti this morning," said Mr Salamah, adding that profit from the deal will appear in the company\’s financial results in the second quarter.
Most of the profits will, however, be distributed to shareholders as part of the 2010 profit, he said.
Last month, the company shareholders approved a recommendation to distribute 2.26 billion dollars in dividends for 2009 even though net profit slumped 39.4 percent to 677 million dollars.
The deal marks an official departure of Kuwait\’s largest listed firm from its previous strategy of becoming one of the top 10 global telecom firms by 2011, advocated by its former CEO Saad al-Barrak who resigned in February.
On the other hand, the deal made Bharti Airtel one of the top five telecom firms in the world, with around 180 million subscribers.
"There will be a fundamental change in the company\’s structure and we will reduce the company workforce in line with the reduction of its size," Mr Salamah said on Tuesday.
Zain, which still operates in Kuwait, Saudi Arabia, Iraq, Jordan, Bahrain, Lebanon, Sudan and Morocco, will see its client base shrink from 72 million to around 30 million subscribers.
Mr Salamah said Zain, whose capitalisation is around 20 billion dollars, has no plans to sell its units in Sudan or Morocco and that "there are no negotiations to sell any other assets."
There are two other mobile operators in the oil-rich Gulf state — the National Telecommunications Co (Wataniya) and Kuwait Telecommunications Co (VIVA).