Is Bharti Airtel’s Zain Deal Good For Africa? Maybe Not

Kato Mivule | February 16, 2010

Bharti is positioned to take over Zain assets in Africa and that includes operations in Uganda. However, Bharti failed at gaining access to Africa’s Telecom Boom by taking over MTN assets in Africa. Bharti then is reported to have borrowed money to secure the Zain assets in Africa. The translation of this is might mean restructuring and more of a profit driven ideology that might sacrifice employees and African indigenous talent in the short term. Yet still Bharti Airtel will bring with it innovation in the area of mobile applications and probably move Africa towards fully utilizing “Africa’s new PC”, as one blogger refereed to the mobile phone phenomenon in Africa.

Bharti AirTel Logo

Zain Sees $5 Billion Profit From Africa Unit Sale | Businessweek
Feb. 16 (Bloomberg) — Zain, Kuwait’s biggest phone company, said it expects a return of as much as $5 billion from selling most of its African operations to Bharti Airtel Ltd. in a deal that would almost halve its assets…Bharti, South Asia’s biggest mobile-phone company, and Zain said yesterday they entered into exclusive talks under which the Indian company would buy the African assets for $10.7 billion. Bharti will pay $10 billion when the deal is completed and the rest a year later, Zain said in a statement on the Kuwait Stock Exchange Web site today. The transaction excludes Zain’s operations in Sudan and Morocco….Bharti is seeking Zain’s African business for access to an estimated 42 million customers across 15 African countries from Nigeria to Uganda. Bharti’s third attempt to enter Africa highlights billionaire Chairman Sunil Mittal’s ambitions to expand overseas as competition intensifies at home, where call rates have fallen to less than a penny a minute. Mittal has tried to gain access to other fast-growing markets, including a second failed attempt last year to buy South Africa’s MTN Group Ltd. for about $23 billion.

Zain Logo

Bharti eyes debt financing for Zain Africa buy – sources | Money Control
Bharti Airtel, which has offered USD 10.7 billion for Kuwaiti telecom Zain’s African assets, is likely to finance the majority of the deal’s purchase price with foreign currency loans, three people familiar with the matter said…Zain, which is selling its telecoms operations in 15 African countries to Bharti, said on Tuesday the deal included USD10 billion to be paid at completion and the remaining USD 700 million by the end of the year…Separately, the NDTV Profit television channel said Bharti was considering a rights issue to help fund the deal. However, at the time of its ultimately thwarted merger talks with South Africa’s MTN Group last year, Bharti had said there was no plan for any rights issue. A Bharti Airtel spokesman declined to comment on Tuesday on how the firm would fund the deal. Standard Chartered and Barclays are advising Bharti Airtel on the merger and its funding, one of the sources told Reuters.

Broadband brings new hope to Africa’s poor, elderly- ITU

The East African|February 8 2010

Effective delivery of essential services in Africa lies with the deployment of broadband networks, according to the International Telecommunications Union (ITU), a United Nations agency for information and communication technology.

During the recently concluded African Union Summit held in Addis Ababa Ethiopia, the agency appealed to African countries to focus on broadband networks as the transformational technology that will aid in the efficient use of energy, management of healthcare in poor, ageing and isolated population as well as the delivery of the best education to future generations.

ITU secretary general Hamadoun Toure said broadband is the most powerful tool to drive global social and economic development as well as accelerate the realisation of the UN Millennium Development Goals.

He, however, noted that the cost of broadband must be made affordable and accessible in order to benefit Africa.

“While the technology exists, the benefits are yet to be realised in most countries. This is because broadband networks can never deliver on their full potential until they provide each citizen with fast, affordable access,” said Dr Toure.

The ITU boss told the AU meeting, whose theme was “Information and Communication Technologies (ICTs) in Africa: Prospects and Challenges for Development,” that broadband networks must be regarded as basic national infrastructure, just like transport, energy and water networks.

Dr Toure added that Africa has to “act as one in its approach to formulating its Vision 2020,” during this decade — whose theme is premised on the idea of an integrated Africa through the utilisation of ICT.

Vision 2020 will address various strategies including common codes and spectrum management, harmonisation of policy and regulatory frameworks and low cost continental roaming.

It will also address affordable rural access and direct inter-continental links through fibre optics and satellite.

“In general, it will tackle key global issues related to ICT such as cyber security, cyber peace and emergency communications especially during natural disasters, content development through e-health, e-commerce, e-government, e-education and e-agriculture,” he said.

In order to encourage investment in the continent’s ICT sector, the ITU boss said there is “real opportunity to use all the potential of public-private partnerships (PPPs).”

The driver to new investments in the ICT sector, he added, would be a policy and regulatory framework conducive to competition and growth, as well as capacity building and training on policy issues in the continent.

On the levels of mobile tele-density (the number of telephone lines per 100 people), Toure said at the start of last year, the levels across Africa were at 38 per cent of the population but had improved to 42 per cent.

He, however, said the Internet user base, which by 2008 had grown to 48 per cent, was still low with only 8 per cent of the continent’s 840 million people having access.

Jean Ping, chairperson of the AU Commission highlighted different projects the body had launched in various fields including ICT, infrastructure, energy, agriculture and education.

“The Commission has also made progress in driving the science, technology and information society. An example is the tele-medicine facility opened at the AU clinic during the Summit through partnership with the Indian government,” said Ping.

The tele-medicine facility, financed by the Indian government, is part of the Pan African e-Network project, which is meant to enhance Africa’s capacity by imparting quality education to students and providing tele-medicine services, tele-education and video-conferencing as well as voice services for heads of state.