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A PROJECT REPORT ON

Acquisition of Bharti Airtel with Zain

SUBMITTED BY

Vivek Yadav
BBA 6TH SEMESTER YEAR 2010-2011

UNDER THE GUIDANCE OF

Pradnya Kothari
(INTERNAL GUIDE)

SUBMITTED TO UNIVERSITY OF PUNE IN PARTIAL FULFILLMENT OF GRADUATION IN FINANCE (B.B.A)

SURYADATTA COLLEGE OF MANAGEMENT & INFORMATION RESEARCH, PUNE 411030.

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Decl

I, Mr. Vivek Yadav the stude t of Suryadatta Institute of Management & Research, Karvenagar Kothrud, Pune (Batch 20082011) hereby declare that I have completed the Project Report of B i Ai el wi Z i is written and entitled Acqui i i submitted by me to the University of Pune, in partial fulfillment of the requirements for the award of degree of Bachelor of Business Administration it is my original work and the conclusions drawn therein are based on the material collected by myself from the Company.

Date: _________ Place: Pune.

Vivek Yadav BB
th

SEMESTER

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ACKNOWLEDGEMENT
This is my gratitude to all those people without whom this PROJECT would have never seen the light of day.

My project becomes a reality only because of co -operation of many people who had helped me in completing this project. I sincerely extend my gratitude to
Mrs. Pradnya Kothari who has given me this golden opportunity to have an insight in the corporate world and who has been a source of guidance and support

I sincerely thank my esteemed guide Mrs. Pradnya Kothari (Fi ce)for her valuable guidance and co -operation rendered to me throughout the project report. It would not have been possible for me to complete this project without their meticulous guidance and suggestions. I give my thanks to Mrs. Surbhi Bhuskute (B.B.A Co-ordi
tor) and

MRS. VIDHYA SALUNKHE (PRINCIPAL SURYADATTA GROUP OF INSTITUTE) for their valuable contribution, co-operation and guidance from time to time for completion of this project.

Last but not the least I would like to thank my parents, friends, Colleagues who directly or indirectly help me during the course of project without which project would have been a Herculean task.

Vivek Yadav

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Content
Chapters No. Title of the Chapters Page No.

1 2

Objectives ACQ ISITION

06 09

An Introduction to the Company Bharti Airtel

13 21

An Introduction to the Company Zain

Bharti shares up on Zain deal; execution a challenge

25

Bharti Airtel completes Zain acquisition

33

Key Drivers Of The Deal

34

35

Bharti Gets $8.3 Billion in Funding for Zain Purchase

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Objectives

o To understand the term Acquisition, on global platform. o To study & to understand the various Legal Aspects involved under such global M & A`s deal. o To understand the criticalities & integrity involved like what can be the payment structure, what can be the source of funding etc. in such mega deal. o To understand the strategy behind, why a particular successful firm need to enter in to such M & A`s form of business & what can be the long term advantages of the same.

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ACQUISITION

When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. From a legal point of view, the Target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded. Like TATA`s acquisition of Land Rover & Jaguar from Ford & Tea Brand Tetley of U.K./Steel Company Corus of U.K.

Top 5 Acquisition Sectors - 2010 Sector Telecom Pharma & Metals, Ores & Banking & Financial Services FMCG, Foods & Beverages Volume 6 21 6 USD mn 13,518 4,854 2,524 %

52 19 10 8 2

18 9

2,192 541

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Top 5 Acquisition Deals - 2010 Acquirer Bharti Airtel Abbott Labs Target % Stake USD mn Zain Africa 100% 10,700 Domestic 100% 3,720 Formulations Business of Primal Healthcare European Solutions to 100% 1,863 Private Bankers Aircel's 17500 100% 1,787 telecom towers Zinc business of 100% 1,340 Anglo American Plc

Hinduja Group GTL Infrastructure Vedanta Resources

An Introduction to the Company Bharti Airtel



Founder, Chairman and Group CEO : Sunil Bharti Mittal Established :

July 07, 1995, as a Public Limited Company

 Business description:
 Provides GSM mobile services in all the 22-telecom circles in India, Srilanka, Bangladesh and now in 15 Countries of Africa.  Provides telemedia services (fixed line and broadband services through DSL) in 88 cities in India.  Also offer suite of Enterprise solutions, DTH and IPTV Services  It is one of Asias leading integrated telecom services providers with operations in 19 countries across Asia and Africa.  It is structured into four strategic business units - Mobile, Telemedia, Enterprise and Digital TV.  The mobile business offers services in India, Sri Lanka and Bangladesh.
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Telemedia business provides broadband, IPTV and telephone services in 94 Indian cities.  Bharti Airtel is the leader in Indian Wireless market with 24.0% market share, followed by Reliance Communications 18.3%,Vodafone 17.5 %.  Its Mobile Services partners are Nokia Siemens, Ericsson, Huawei.  Telemedia & Long Distance Services partners are Nokia Siemens, Juniper, Cisco, Alcatel Lucent, ECI, and Tellabs.  Call Centre Operations partners are IBM Daksh, Hinduja TMT, Teleperformance, Mphasis, First source & Aegis.

Today, Airtel innovates in almost everything that it presents to the market. An excellent example is Easy Charge - India's first paperless electronic recharging facility for prepaid customers. As evidence of its fine record, Airtel has also been conferred with numerous awards. It won the prestigious Techies Award for 'being the best cellular services provider' for four consecutive years between 1997 and 2000 - a record that is still unmatched. And in 2003, it received the Voice & Data Award for being 'India's largest cellular service provider', amongst others.

An Introduction to the Company Zain

(Zain was established in 1983 in Kuwait as the region's first mobile operator)

Services include:
Mobile telecommunication and data services, including operation, purchase, delivery, installation, management and maintenance of mobile telephones and paging systems in Kuwait and 21 other countries in the Middle East and North Africa.

ZAIN AFRICA :
 Wholly owned subsidiary of Zain  Incorporated in Netherlands and held the African operations of Zain.  The company was originally named Celtel which was acquired by Zain in 2005 and renamed as Zain International BV

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 Zain, formerly MTC, was the first mobile telecommunications company in the Middle East when it started its operations in Kuwait back in 1983.  Its subsidiaries include; Mobile Telecommunications Company Lebanon (MTC) SARL, Lebanon, and Sudanese Mobile Telephone (Zain) Company Limited, Sudan.  It is a public company engaged, together with its subsidiaries, in the provision of mobile telecommunication and data services, including operation, purchase, delivery, installation, management and maintenance of mobile telephones and paging systems in Kuwait and 21 other countries in the Middle East and North Africa.  Zain Africa is Wholly owned subsidiary of Zain, incorporated in Netherlands and held the African operations of Zain.

ZAIN ANNOUNCES HALF-YEAR 2010 FINANCIAL RESULTS

 Period highlighted by Middle East revenues of US$2.33 billion, a year on year increase of 10%

 Net Income soars 488% to US$3.085 billion (including capital gain of US$2.653 billion from the sale of Zain Africa)

 Number of served customers reaches 34.2 million, an increase of 28% Kuwait, August 9, 2010

 Zain announces its consolidated financial results for the half -year, ending 30 June, 2010.
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H1, 2010 Key Performance Indicators (in Kuwaiti Dinars & USD)

Total Managed Active Customers Consolidated Revenues EBITDA EBIT Net Income (including capital gain) Earnings Per Share

34.2 million up 28% on H1, 2009 KWD 672.6 million (US$2.33 billion) KWD 287.2 million (US$ 995 million) KWD 206.8 million (US$ 716 million) KWD 895.3 million (US$ 3.085 billion) Fils 232 (US$0.80)

Bharti shares up on Zain deal; execution a challenge

Bharti Airtel now needs to work on getting regulatory clearances for its $9 billion deal to buy 15 African operations of Kuwaiti telecom Zain, and turning around the lossmaking assets would be its priority. The acquisition, which would help Bharti become the world's No. 5 wireless firm by subscribers with presence in 18 countries, also comes with tough financial and management challenges for the Indian mobile market leader already battling a highly-competitive home turf. "A big challenge is streamlining operations across all these countries with limited resource availability," said Kamlesh Bhatia, principal analyst at research firm Gartner. "They also have to turn the company around in the fastest time possible." Bharti shares rose as much as 2.7 percent on Wednesday morning after the company signed definitive agreements with Zain late on Tuesday. At 0518 GMT, the shares were trading 1.3 percent up in a Mumbai market that was down 0.1 percent. The deal would give Bharti 42 million subscribers in 15 African countrie s, which have a combined estimated annual revenue of $3.6 billion, but are currently making losses. "The main challenge for Bharti lies in raising revenues and adding subscribers as Zain has been losing both in some of the countries," said Amit Ahire, analyst with Ambit Capital. Also, issues in Gabon and Nigeria are examples of what Bharti is going to face in a
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new continent. The government of the small central African nation of Gabon weighed in on Monday against the deal, saying Zain Gabon had not compli d with regulations e and that it reserved the right to take "all necessary measures". Minority ownership of Zain's operations in Nigeria, the biggest market in the deal, is also in dispute. "Gabon is a very small market and in most cases regulators can al ays w be dealt with. But Nigeria is a bigger stumbling block, because it is a key market and shareholders are always tricker to deal with," said Gartner's Bhatia. Bharti Chairman Sunil Mittal has said the company would work with regulators and expected "tremendous support" in countries including Gabon. Bharti would also talk to the minority shareholders in Zain Nigeria. Bharti is paying $9 billion in cash to Zain, what many regard as a full price, and after assumption of $1.7 billion of debt on the target firm's books, the deal is valued at around 10 times EBITDA, more than Bharti's own valuations. Bharti has secured debt of up to $8.5 billion from a clutch of lenders to fund the deal and may have to spend more to expand the networks, which analysts say h ve been a under-invested for years. And adding to that would be spending for next month's 3G spectrum auction in India, which analysts estimate could cost a firm up to $2 billion just for the licence.

Bh r

Ar e q

o o

e e

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Bharti Airtel Chairman and CEO Sunil Mittal (centre) with Bharti Enterprises Deputy Group CEO Akhil Gupta (left) and Bharti Airtel CEO International Manoj Kohli at a press conference in New Delhi.

Becoming the world's fifth largest mobile operator, Sunil Mittal led Bharti Airtel on Tuesday announced that it had completed the acquisition of Zain Telecom's Africa operations for $10.7 billion.

The company has now 180 million subscribers in 18 Asian and African nations. The company announced that it would launch the Airtel brand in Zain's operations in all the 15 nations in October. Announcing the completion of the deal at a press conference her e, Bharti group Chairman Sunil Mittal said the transaction is the largest ever cross-border deal in an emerging market and will result in combined revenues of about $13 billion.''

Bharti finally entered Africa after aborting negotiations twice for merger with MTN since 2008, with Mr. Mittal stating that in the Zain's case Airtel would have a total control. He said Zain Africa would now be 100 per cent subsidiary of Bharti International. This deal would signal many new investments that would go to Africa, he added. At present, China Mobile is the world's largest mobile player with a subscriber base of 522 million, followed by Vodafone (348 million), Telefonica (206 million) and American Movil (201 million).

AFRICA STRATEGY
Elaborating on Africa strategy, Bharti's international operations in-charge Manoj Kohli said the company had set a target of 100 million subscribers and $5 billion revenues by 2012-13.

Bharti has acquired Zain Telecom's operations in 15 African nations, excluding Sudan and Morocco. Zain has operations in 17 countries in the region and is claiming to be the second largest operator after MTN.

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Asked whether he regretted missing a deal with MTN twice and whether that was his first choice, Mr. Mittal said MTN was the first opportunity that was available at that time. In MTN's case, we would have had board control but no management control and no change in brand.

There were compromises to be made (in MTN). Zain is the second largest operator and that is the only difference. But we will have full control and our own brand.''

With this acquisition, we will have an unparalleled footprint in one of the fastest developing regions in the world. We are looking at more opportunities as we build more roll outs in Africa,'' he remarked.

The company has also reached a settlement with Broad Communications, the single largest shareholder in Zain Nigeria, following which its chief Otudeko would now head Bharti's operations in Nigeria.

Key Drivers Of The Deal

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Bh r

A r e sh re shoo s up o Zain deal

Shares of Bharti Airtel gained nearly three per cent on the Bombay Stock Exchange (BSE) after the Indian firm announced signing of the mega $10.7 billion deal to acquire Kuwait-based Zain Telecom's Africa . business.
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After a firm opening, Bharti shares surged 2.75 per cent to a high of Rs 319.50.

Under the agreement, Bharti would acquire Zain's African mobile operations in 15 countries for an upfront payment of $8.3 billion and pay another $700 million after a year. Besides, it would take debt liability of $1.7 billion.

On the National Stock Exchange (NSE), too Bharti Airtel moved up 2.85 per cent to Rs 319.70. Over 23 lakh shares changed hands on the two bourses in morning trade.

The two companies had entered into exclusive talks on February 15. Since then the stock has gained Rs 33 a share or nearly 12 per cent.

With the acquisition, Bharti Airtel will enter the world's fastest growing telecom market in Africa. The two businesses combined will have more than 179 million subscribers with total revenue of $13 billi on.

With this deal, Bharti Airtel is set to become the world's fifth largest wireless company with operations in countries including, Kenya, Nigeria, Uganda and Zambia.

Bharti Gets $8.3 Billion in Funding for Zain Purchase

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Bharti Airtel Ltd., Indias biggest mobile-phone company, said it obtained $8.3 billion in funding for its proposed acquisition of Zains African assets; a day after its board gave approval for a formal offer this week. Bharti will get $7.5 billion in loans from a group of banks led by Standard Chartered Plc and Barclays Plc, the New Delhi- based company said in an e-mail statement. Bhartis board yesterday approved the planned $9 billion purchase of the African wireless assets of Zain, Kuwaits biggest phone company, according to two people with knowledge of the negotiations. The carriers have until March 25 to reach an agreement that would give Indias largest mobile-phone operator 42 million new subscribers in 15 African countries. Bharti shares have declined 5.4 percent this year, trailing a 0.6 percent advance by the benchmark Sensitive Index. The stock was the second-worst performer of 87 companies on the Bloomberg World Telecommunications Index in the past six months.

FINANCING
The phone operator was seeking a six-year $8.5 billion loan with an average life of 4.75 years, two people with direct knowledge of the matter said last week. Bharti may pay interest of 2 percentage points more than the London interbank offered rate, the people, who declined to be identified, said. Senjam Raj Sekhar, a Bharti spokesperson, declined to comment on the interest rate offered on the financing announced today. The company will get a rupee loan equivalent to as much as $1 billion from the State Bank of India, which would also cover transaction costs, Bharti said. The other banks participating in the financing led by Standard Chartered and Barclays include State Bank of India, Australia & New Zealand Banking Group Ltd., Bank of America Merrill Lynch, BNP Paribas SA, Credit Agricole CIB, DBS Group Holdings Ltd., HSBC Holdings Plc, Bank of Tokyo-Mitsubishi UFJ Ltd. and Sumitomo Mitsui Banking Corp., Bharti said. Global Investment House KSCC is acting as regional financial adviser on the deal, Bharti said.

ZAIN CLIMBS
Zain climbed as much as 2.9 percent to the highest level in five months in Kuwait trading on speculation of Bhartis formal bid before closing 1.5 percent higher at
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1,380 fils. The stock has gained 35 percent this year, outperforming a 5.7 percent advance by the benchmark Kuwait Stock Exchange Unweighted Index. Due diligence for the proposed acquisition of its African assets by Bharti is proceeding smoothly and as planned, Zain said in an e-mail statement today. Zains board will meet on March 24 to discuss the latest developments, it said. Bharti has sought overseas businesses as competition at home has reduced call rates for many of its 122 million Indian subscribers to as little as half a U.S. cent a minute. This is Bhartis third attempt to enter Africa, after being thwarted twice in efforts to merge with South Africas MTN Group Ltd. The Indian carrier wont materially lose value on the deal, G.V. Giri, an analyst at IIFL Capital Ltd. in Mumbai, said yesterday. Bharti may overpay by as much as $1 billion to $1.5 billion and should be able to recover that through cost cutting, he said. Giri maintained his buy rating on the stock.

NIGERIA PROTECTION
Zain may be asked to provide Bharti legal protection from a dispute in Nigeria, one of the people said yesterday, declining to be identified because the discussions arent public. The board didnt specifically ask for the protection, and was satisfied with the proposals that Bharti management made with regards to Nigeria, the second person said. Econet Wireless Holdings Ltd., based in a suburb of Johannesburg, is disputing control of Zains unit in Nigeria. The Nigerian operations are the single-largest revenue producer for Mobile Telecommunications Co., known as Zain, and have been described by Bharti Chairman Sunil Mittal as the most important piece of its planned purchase.

ACCUMULATE BHARTI AIRTEL

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Bharti Airtel is showing a negative move on the basis of news that Bharti Airtel Offers $10.7 Billion for Zain African Assets,Bharti Airtel Ltd, South Asias largest mobile phone company offered 10.7 billion U.S. dollars for the majority of African assets Zain Kuwait, a move which would lead to one of the largest emerging markets-phone operators.

Quarter No. Period Ending Type Net Sales / Interest Earned / Operating Income Total Income Expenditure Operating Profit (Rs. in Millions) Interest Profit Before Depreciatio n and tax Depreciatio n

Q3

Q1+Q2+Q3

Till DecTill DecDec-2009 Dec-2008 Differenc Differenc 2009 2008 e e UnUnUn-Audited Un-Audited Audited Audited

87,554.50 88,301.10

-0.85 % 266,976.20

249,974.90

6.80 %

87,715.60 88,502.50 54,503.60 54,762.40 33,212.00 33,740.10

-0.89 % 267,549.50 -0.47 % 162,699.70 -1.57 % 104,849.80 -156.18 %

251,053.70 155,431.50 95,622.20

6.57 % 4.68 % 9.65 % -140.57 %

-2,256.60

4,016.60

-5,758.20

14,191.80

35,468.60 29,723.50

19.33 % 110,608.00

81,430.40

35.83 %

9,901.80

8,143.80

21.59 % 18.48 % 73.86 % 14.61 % 14.61 %

28,872.20 81,735.80 8,770.30 72,965.50 72,965.50

23,039.50 58,390.90 1,702.30 56,688.60 56,688.60

25.32 % 39.98 % 415.20 % 28.71 % 28.71 %

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Profit before 25,566.80 21,579.70 Tax Tax Profit after Tax Net Profit 2,445.80 1,406.80

23,121.00 20,172.90 23,121.00 20,172.90

(Rs. in Millions) Equity Capital Reserves Basic And Diluted EPS after Extraordinar y item Operating Profit Margin Net Profit Margin Cash EPS 18,984.80 18,982.20 331,223.6 240,860.9 0 0 0.01 % 189,848.00 37.52 % 189,822.00 0.01 % 37.52 %

3,312,236.0 2,408,609.0 0 0

2.40

1.10 118.18 %

6.20

3.00

106.67 %

379.30

382.10

-0.73 %

392.70

382.50

2.67 %

264.10 60.90

228.50

15.58 %

273.30 263.00

226.80

20.50 %

106.30 -42.71 %

298.70 -11.95 %

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S ructure of Acquisition

[*The fifteen jurisdictions are: 1) Burkina Faso, 2) Chad, 3) Republic of the Congo, 4) Democratic Republic of the Congo, 5) Gabon, 6) Ghana, 7) Kenya, 8) Malawi, 9) Madagascar, 10) Niger, 11) Nigeria, 12) Sierra Leone, 13) Tanzania, 14) Uganda & 15) Zambia.]

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Transaction Details of
Bharti Airtel-Zain
Acquirer Seller Target Acquisition
Bharti Airtel Limited Mobile Telecommunications Company KSC Zain Africa International BV Bharti Airtel Limited indirectly acquired 100% of Zain Africa International BV and its business operations in Africa from Zain under a privately negotiated agreement. Security (Share) Sale

Mode of acquisition

Consideration

USD 10.7 billion

Mode of Payment

All cash deal Bharti Airtel to pay: a) USD 8.3 billion within three months from the date of closing, b) USD 700 million after one year from the date of closing, c) USD 1.7 billion assumed as debt on the books of Zain.

Funding

Leveraged Buy-out a) Bharti Airtel to borrow USD 7.5 billion from a consortium of banks led by Standard Chartered Bank and Barclays Bank. b) Bharti Airtel to avail of a rupee loan of USD 1 billion equivalent from SBI Group.

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Problems in the Execution of the Deal

NIGERIAN HURDLE
 Econet Wireless International: A major telecom player in Nigeria, wanted to use its pre-emption Rights of right of first refusal in respect of shares had been breached When Econet"s predominantly Nigerian partners decided to sell their Shares in Vie Networks (or V-Mobile) to Zain in 2006.  Econet has also applied for interim measures to prevent Zain from selling, transferring, disposing of, dealing with or otherwise encumbering the disputed stake until the matter is resolved.  Until the time the ownership issue over Zain Nigeria is resolved, Zain faces a hurdle in transferring its Nigerian assets to Bharti Airtel.

CONGO CONTROVERSY
 The Government of Republic of Congo said that they had not been informed of Bharti Airtels deal with Zain and that the deal was a clear violation of the law in our country.  The Government also claimed that the deal is in contravention to
Zain`s local mobile license.

 Until it would be difficult for the Bharti to get all regulatory

upproval.

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GABON GLITCH
 In this case, the Government of Gabon raised a regulatory objection to the deal alleging that Zain had not complied with certain telecom regulations in Gabon.  The Gabonese Government has disapproved the sale of Zain`s Gabonese assets & reserves the right to take all necessary measures.  But off late, Government of Gabon gave its approval to the sale of Zains assets in Gabon to Bharti.

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SWOT Analysis of the Deal

STRENGTH:
 Post acquisition, Bharti Airtel will become fifth largest service provider in terms of the number of subscribers.  The deal would give Bharti 42 million subscribers in 15 African countries, which have a combined estimated annual revenue of $3.6 billion  Bharti, largest telecom player in India, can replicate the success of India in Africa  Strategic Alliance with other stake holders, including Nokia, SingTel & Sony Ericson

WEAKNESS:
 Bharti has paid a heavy price for the deal  Zain Africa has made a net loss of USD 112 million in the nine months to September 2009. Seven of Zains African units are loss -making, including its highest revenue earner, the Nigerian arm, Zain Nigeria.  The deal is highly volatile and carries huge commercial risk for Bharti Airtel  The loan would be a drag on Bharti Airtel's earnings with no immediate returns expected from the loss-making target.

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OPPORTUNITY:
Telecom penetration in African countries varies from 37 per cent to 65 per cent. There are few markets with penetration less than 40 percent The African market is homologous to Indian market in term of its structural similarities. Monthly ARPU on the Continent averages USD 7.5, which is higher than Indias ARPU of USD 5 Africa is too good an opportunity for Bharti Airtel to experiment the model that it has mastered in India, particularly its rural strategy.

THREAT:
 Zain Africa is in trouble and financial paralysis is looming over its head  Bharti Airtel will have to put in a lot of effort to align the varied cultures; with 15 countries to tackle it definitely will be a nightmare.  Bharti-Zain will be getting a tough fight with rival like MTN and China Mobile  There are greater political and economics risks in Africa .  Most of the countries are political unstable and operation are still loss making.

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CONCLUS ON OF TH D AL

In the largest ever telecom takeover by an Indian firm, Bharti Airtel on Tuesday completed a deal to buy Kuwait-based Zain Telecom's African business for $10.7 billion (about Rs 48,000 crore). Announcing the closure of the deal, Sunil Mittal said, "We are delighted at the closure of this transformational deal for India and Bharti Airtel. The transaction is the largest ever cross-border deal in an emerging market and will result in combined revenues of about $13 billion." On March 30, 2010, Bharti had entered the deal to acquire Zain Telecom's operations in 15 nations, excluding Sudan and Morocco. Zain has operations in 17 African countries. The closure of the deal implies that Bharti has received all the approvals from the governments and regulators of each of these 15 nations. This acquisition, besides giving Bharti its much-desired presence in Africa , makes it the world's fifth largest wireless company with operations across 18 countries and a subscriber base of around 179 million. Bharti had failed twice in the last two years to forge an $23 billion merger deal with South African telecom giant MTN.

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The Zain acquisition, the second largest by an Indian entity after Tatas' Corus deal, would take the revenue of the combined entity to an estimated $13 billion. The African business would widen Bharti's reach, which was hitherto restricted to Asia and the Indian Ocean region with businesses in Sri Lanka, Bangladesh and Seychelles. Of the $10.7 billion enterprise value of Zain, Bharti will be paying $8.3 billion upfront and $700 million after a year. It would also take over approximately $1.7 billion of Zain's debts as on December 31, 2009. Of the $8.3 billion paid to Zain, Bharti has raised debt from a consort ium of foreign banks and State Bank of India with the lead-arranger and lead-advisor Standard Chartered Bank committing the highest amount -- $1.3 billion, followed by Barclays at $900 million. The rest of the co-advisors -- ANZ, BNP, Bank of America-Merrill Lynch, Credit Agricole CIB, DBS, HSBC, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation -- have allocated $600 million each. State Bank of India has agreed to an up to USD one billion loan in rupee terms. With Bharti Airtel sealing the $10.7-billion takeover deal for African assets of Zain , corporate India's outbound merger and acquisition (M&A) activity in 2010 so far has touched $15 billion. The deal marks the second biggest overseas acquisition by an Indian company, after Tata Steel purchased Corus Group for $12.2 billion in an all cash deal in January 2007. The Corus deal was the largest Indian takeover of a foreign company and made Tata Steel the world's fifth-largest steel group. The acquisition of Zain's African assets would catapult Bharti Airtel to become the fifth largest telecom operator in the country with revenues of an estimated $13 billion and a subscriber base of o ver 179 million. Led by Bharti-Zain, the outbound M&As by Indian corporate have touched $15 billion across 23 deals between January- March 23, 2010, according to Arun Natarajan, CEO of Venture Intelligence.
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REASONS FOR FAILURE OF BHARTI AIRTEL Ac uisition WITH MTN Telecom

Finance Minister Pranab Mukherjee on Thursday described the failure of talks between India's telecom giant Bharti Airtel and South Africa's MTN on the USD-23 billion merger deal as "part of the game".

"You know sometimes amidst the big companies ... these deals become successful, sometimes these deals fail. This is part of the game," Mukherjee told.

The proposed mega deal, which would have been the world's largest in the telecom sector, fell through for the second time in just over a year after the end of the exclusivity period yesterday.

Sunil Mittal-led Bharti called off discussions with MTN citing the South African government's rejection of the proposed merger structure, which would have created the world's third largest telecom company with combined revenues of over USD 20 billion annually and a subscriber base of over 200 million.

The deal failed as the India n laws did not provide for dual listing of shares, which was being insisted by the South African government. When asked if the deal termination had political reasons more than legal issues, Mukherjee said, "I am not making any comment on this. I have st ated you the fact."

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Bharti Airtel: Reasons behind The Downgrade

Telecom major, Bharti is in talks to buy Kuwaiti telecom firm Zains African business, excluding Morocco and Sudan. It is the Indian firms third attempt at gaining a foothold in a continent that offers a last opportunity for major subscriber growth.

The deal marks one of the biggest cross -border transactions in the Middle East in years. Bharti has lined up USD 9 billion in loans from foreign and local banks for its planned acquisition. Global rating agency Standard & Poors has placed Bharti on credit watch with negative implications post this bid.

The reason S&P placed BBB- credit rating on Bharti on a credit watch negative on Friday was the direct result of the announ cement that the company has made about their plans to acquire Zain, Africa. Most of the reason for that is that it really has to do with the financing plan that would be used to execute that acquisition. That financing plan is largely comprised of debt as far as we have been informed.

That financing plans could change going forward but at the moment I am assuming it would be a debt funded acquisition. The amounts would be anywhere between USD 7-9 billion of additional debt to what the company already has on its books. In terms of its debt, as we look at it, we at S&P may look at the debt a bit differently than maybe other analysts in the sense that we do add back. We adjust some of the operating leases that the company has and consider that as debt equivalent.

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