Bharti Said to Seek Zain Cover on Nigeria for Deal (Update2)
March 19 (Bloomberg) -- Bharti Airtel Ltd., the Indian phone company planning a $9 billion purchase of Zain’s African assets, may ask Zain for legal protection from a dispute in Nigeria, according to a person familiar with the negotiations.
The proposal, to be considered by Bharti’s board on March 20, will seek an indemnity from Zain against ongoing litigation involving operations in Nigeria, the person said, declining to be identified because the discussions aren’t public. Econet Wireless Holdings Ltd., based in a suburb of Johannesburg, is disputing control of Zain’s unit in Nigeria.
The Nigerian operations are the single-largest revenue producer for Kuwait’s Zain, and have been described by Bharti Chairman Sunil Mittal as the most important piece of its planned acquisition. Econet Chief Executive Officer Strive Masiyiwa said in an interview yesterday that there has been no agreement or settlement in the dispute over the Nigerian unit.
Econet has “not heard from Zain or Bharti” on Nigeria, Masiyiwa said, adding that he’s “cheesed off” about reports that a settlement has been reached.
India’s largest wireless company’s plan can’t include the purchase of Zain’s Celtel Nigeria B.V. unit, Econet has said. For Bharti, troubles in Nigeria, the continent’s most-populous nation and its fastest-growing telecommunications market, are among hurdles the company faces as it seeks to take over Zain’s operations in 15 African countries.
Bharti spokesman Senjam Raj Sekhar said the company had no comment. Zain spokesman Ibrahim Adel said he can’t comment on what Bharti may do.
Econet’s Claim
Kuwait’s Mobile Telecommunications Co., or Zain, and Bharti said on Feb. 15 that they would hold exclusive talks until March 25 on the assets.
Bharti added 3.9 percent to close at 311.90 rupees in Mumbai trading, posting its biggest gain since Nov. 30. The stock was the best performer on the Bombay Stock Exchange’s benchmark Sensitive Index, which advanced 0.3 percent.
Econet is seeking to overturn a 2006 deal in which Celtel bought a 65 percent stake in Nigerian mobile operator Vmobile, since renamed Zain Nigeria. Econet, with 5 percent of Zain Nigeria, says it should have had the right of first refusal on those shares.
Econet’s Masiyiwa has said that the case is still in arbitration and that until that process has been completed, “Nigeria cannot be sold, it is not for sale, there can be no due diligence by Bharti or any other party.”
Zain bought Celtel International for $3.4 billion in 2005 to expand into 13 African countries, including Kenya and Nigeria.
The Nigerian unit is a key asset for Zain. In 2008 Zain generated about 21 percent of its total earnings before interest, tax, depreciation and amortization in Nigeria and about 22 percent of its total sales
March 19, 2010, 8:18 AM EDT
