SingTel – BT

Bharti-Zain deal edges towards finishing line

2 special purpose vehicles formed, in Singapore and the Netherlands

BHARTI AirTel has reportedly formed two special purpose vehicles (SPV), in the Netherlands and Singapore, for the acquisition of Zain's assets in South Africa.

India's Economic Times said that Bharti officials are expected to make their way to the Netherlands in the next few days to finalise this SPV arrangement.

SPVs are typically used to acquire and finance specific assets and companies tend to use them to bankroll large projects to avoid putting the entire firm at risk.

Beyond the establishment of these SPVs, the report said that Zain has also agreed to reimburse Bharti for the legal costs incurred for its ongoing dispute between its Nigerian unit and Econet Wireless Holdings.

This could remove the final hurdle in the acquisition talks between the two operators.

Bharti on Wednesday said that it had completed due diligence for its US$9 billion bid to acquire Zain Africa and the official paperwork for the deal is 'expected to be signed soon'.

This comes after a month of exclusive negotiations between the two parties. Once completed, Bharti, in which Singapore Telecommunications has a 32 per cent stake, will gain some 42 million mobile subscribers across 15 African markets.

Their combined operations will have a revenue base of nearly US$13 billion and Ebitda (earnings before interest, taxes, depreciation and amortisation) of around US$5 billion.

Bharti failed in its two previous attempts to expand to the African continent. The first opportunity surfaced in 2008 when it engaged in merger talks with South African telecommunications conglomerate the MTN Group but a deal could not be reached then.

Bharti and MTN entered into exclusive merger negotiations for a second time last year but the proposed US$24 billion cash plus share swap deal was eventually canned due to regulatory hiccups.

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