Tanzania Retains 40pc Stake In Zain

The government of Tanzania is set to receive TZS15.4 billion (USD11.2 million) and to hold on to its 40% stake in fixed and mobile operator Zain Tanzania following the sale of the telco to India’s Bharti Airtel.

Last month the Indians finalised the acquisition of the African assets of Kuwait-based Zain Group, with the deal valued at USD10.7 billion. Under the terms of the deal, first announced in March 2010, Bharti will pay USD8.3 billion upfront, followed by a further cash payment of USD700 million after one year, while it will also take over approximately USD1.7 billion of Zain’s debt.

The Citizen now reports that the country's minister for Higher Education, Science and Technology, Prof Peter Msolla, told the National Assembly that the government is still in talks with Bharti Airtel concerning the sale. In a debate on the country’s budget for the 2010/11 financial year, Msolla said: ‘We met with the company’s officials on 21 June to discuss the sale… We have told them to finalise the evaluation of the assets so that we can determine whether the payment made to us is satisfactory.’ The minister went on to add: ‘Since the government has shares in the company, it is imperative that it be involved in transactions regarding the sale. The shares we hold in the company are assets that ensure our role is not underestimated.’

Bharti has taken over Zain’s operations in 15 countries: Burkina Faso, Chad, Republic of Congo, Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia. The Kuwaiti company’s subsidiaries in Morocco and Sudan were not included in the sale.

Cel C Joins Zain's One Network

Zain has announced the expansion of its ‘One Network’ platform to South Africa in a strategic partnership with Cell C, the country’s smallest cellco. Over 41 million Zain customers across Zain Africa’s 15 mobile operations may now benefit from ‘One Network’ services when visiting South Africa. The ‘One Network’ borderless mobile phone platform enables pre-paid and post-paid Zain customers when travelling to another 'One Network’ partner country to be treated as a local customer in terms of pricing, while retaining home country service functionalities. Now, in South Africa, Zain customers will be able to make calls, send SMS and access the internet (data) at local rates of the visited country and to receive incoming calls at a minimal charge.

The 15 Zain countries that benefit from this service with Cell C in South Africa are: Burkina Faso, Chad, the Republic of the Congo, the Democratic Republic of the Congo, Gabon, Ghana, Kenya, Malawi, Madagascar, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia.

Bharti And Zain Sign Sale Deal

Just a few days after the revelation that the board of Kuwait-based telecoms group Zain had approved an offer for its African assets, India’s Bharti Airtel has announced that it has entered into a legally binding agreement for the acquisition. Under the terms of the agreement Bharti will make a cash payment of USD9 billion, of which USD8.3 billion will be paid on closing of the deal; the remaining USD0.7 billion will be due one year after completion. Further, Bharti will assume USD1.7 billion of consolidated debt obligations as part of the deal, making it the second largest ever overseas acquisition by an Indian company, only topped by the USD12.9 billion Tata Steel paid for UK-based Corus Group in 2007.

Marking Bharti’s third attempt to enter the African markets, after two failed attempts to purchase South Africa’s MTN Group, when the deal closes the Indian company’s subscriber base will increase by approximately 42 million, spread across 15 countries: Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Gabon, Ghana, Niger, Kenya, Madagascar, Malawi, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia. Zain’s Moroccan and Sudanese subsidiaries are, however, not included as part of the deal. Indian billionaire and Bharti’s chairman and founder, Sunil Mittal, said of the development: ‘With this acquisition, Bharti Airtel will be transformed into a truly global telecom company.’

Meanwhile, it was reported yesterday by Reuters that the government of Gabon may oppose the sale of Zain's Gabonese unit to Bharti. The state reportedly issued a statement saying that it disapproves of the transaction and 'reserves the right to take all necessary measures', adding that Zain Gabon has 'not complied' with local telecoms regulations.

Millicom Reports 5% Rise in Q2 Revenues

Millicom International has reported a five percent rise in Q2 revenues to US$814 million compared to a year ago but a drop of 13% in net profits of $114 million, down from the US$132 million a year ago. In Q2 09, Millicom added 1.7 million net new mobile subscribers, reaching 30.8 million total mobile subscribers, an increase of 25% versus Q2 08 as Millicom continues its focus on attracting the more loyal and higher revenue generating customers.

Mikael Grahne, CEO of Millicom, commented: "Our Q2 09 results continue to show the benefits of the actions taken in the last few quarters to focus on both margins and cash flow generation, whilst maintaining or improving our market position. Our EBITDA margin moved up to 45.6%, which is above our long term target margin for the Group, as we tighten cost controls and adapt our product offering to changing market conditions. Cash flow continues to improve, with operating free cash flow standing at 15% of revenues in Q2 09. We are also pleased to have grown our market share by 0.7 percentage points over the quarter.

In Central America, Honduras grew its subscriber base by 19% year on year, despite the entry of a third operator at the end of Q4 08. Guatemala grew its subscriber base by 18% year-on-year and El Salvador by 17%.

In South America, total subscribers increased by 17% year-on-year with Bolivia showing growth of 51%. In Colombia, the increase in subscribers was 5%, and in Paraguay it was 15%.

In Africa, the best performing markets in terms of net subscriber additions were Chad which grew by 93% year-on-year, adding 110 thousand net new subscribers in Q2 09, and Tanzania, which grew by 81% year- on-year, adding 413 thousand net new subscribers in Q2 09. In Senegal, total subscribers increased by 26% and 144 thousand net new subscribers were added in Q2 09, which is indicative of the continuing trust that subscribers are placing in the Tigo brand.

The topic of the planned sale of the company's Asian assets, Grahne added, "The disposal of our Asian assets is in progress and expressions of interest have been received from a number of parties for the three assets. We expect the disposal to be completed by Q1 2010."

Capex is expected to be approximately $750 million in 2009 (excluding capex relating to Asia of approximately $100m). The EBITDA margin is expected to be maintained at the current level for the full year. Millicom expects operating free cash flow to be in the mid teens as a percentage of revenues for the 2009 year.