Bharti has decided to acquire the Africa operations of Zain at an EV of $ 10.7 Bn . This comes after its earlier failed bid to acquire MTN.
After the recent entry of new players in the Indian market, Bharti has been desperate to acquire major presence outside of India and Africa is probaly the only large scale growth market that it can gainfully deploy its cash in.
Bharti joins the long list of other Indian companies trying to strike it big in the continent. NIIT is already making it big in the region through franchising of its IT training business
While the story is good and deployment of exess cash makes sense, it would not be an easy task for Bharti to create value from this deal. The market senses this and which is why its stock has been punished in the last few days
As earlier discussed on this blog, the current acquisition makes a lot more sense for Bharti than its previous bid for the largest player in the contient (MTN). Can Mittal work his magic in the the region and propel Zain to the leadership position, ahead of MTN?