Bharti to cough up $9 bn besides loan liabilities

Telecom giant Bharti Airtel today said it would pay about $9 billion (nearly Rs 42,000 crore) to buy African assets of Kuwait-based Zain, announcement of which pulled down Indian firm's share prices by 13 per cent in two days.

"The total agreed enterprise valuation of $10.7 billion is likely to result in a total payout of around $9 billion based on the estimated net debt of about $1.7 billion as on 31st December 2009," Bharti said in a statement here.

Company's statement comes in the wake of Bharti's shares lost Rs 40 a share to close at Rs 272.45 per share since yesterday leading to erosion of market capitalisation by about Rs 16,000 crore to Rs 1.03 lakh crore.

Of the $9 billion payout, Bharti would be paying $8.3 billion immediately after the deal and the remaining $700 million after one year.

Meanwhile, Zain telecom today said that it expects returns worth $5 billion from the sale of the company's African assets to Bharti Airtel.

Asked to clarify about the $10.7 billion valuation Bharti had announced yesterday, the company officials said this is an enterprise value that includes debt and equity.

Bharti has offered to buy all of the company's African operations, except in Sudan and Morocco, for $10.7 billion.

Zain in a statement to the Kuwait Stock Exchange said that after payment of certain obligations, the sale of African assets to Bharti is expected to generate returns of $5 billion.

Bharti and Zain have agreed to hold exclusive discussions untill March 25 to complete the transaction involving various regulatory clearances.