KUWAIT CITY, June 8: Mobile Telecommunications Company KSC (Zain) is pleased to announce that it has now satisfied all required conditions precedent to closing of the sale of 100% of Zain Africa BV (Zain Africa) to Bharti Airtel Limited (Bharti). This transaction values Zain’s African portfolio (excluding Sudan and Morocco) at $10.7bn on an enterprise basis. This transaction has resulted in aggregate net cash proceeds of $8.968bn. As at 8th June 2010, Zain confirms that it has received $7.868bn of cash proceeds from Bharti. Over the next 6 months, Zain expects to receive up to an additional $400m upon certain milestones being achieved.

The balance of $700m is due one year from completion as per the original agreements signed on 30th March 2010. In fulfillment of its debt obligations, Zain has repaid the $4bn Revolving Credit Facility which the company entered into in July 2006. Going forward, Zain intends to utilise the remaining proceeds to pay dividends and to attend to other corporate matters. Under the terms of the original agreements, Zain has licensed the use of the “Zain” brand and related trademarks to Bharti in all 15 African operations for an interim period. Commenting on the sale, Mr Asaad Al Banwan, Chairman of the Board of Directors of Zain, said: “This sale crystallizes the significant value we have created for our shareholders over the last five years. The Board of Directors will consider the best use of the remaining proceeds to further enhance value for all stakeholders.”

Mr Al Banwan added, “We express our sincere appreciation to the Governments, regulators, customers and employees in the respective African jurisdictions for allowing us to play a vital role in the development of telecommunications infrastructure. Our experience in Sub Saharan Africa has been a rewarding one for us and, we believe, for the populace of the countries that supported our journey.
“The driving principle of our interactions in all countries in which we operate in is to always be the exemplary corporate citizen. This is what drove us to help develop the economies of the markets we operate in and, in the process, reap the benefits for all stakeholders. We will always have fond memories of this experience and particularly of our Zain family in Africa. They have made this success possible.
“We are certain that Bharti will rely on their capabilities and dedication and will lead them to further success. We wholeheartedly wish Bharti great success in continuing the development of telecommunications across the African continent.”

Mr Nabeel Bin Salamah, CEO, Zain Group, said, “Zain stands at the threshold of a new era, one that will allow the company to focus on its highly cash generative Middle Eastern operations, investing in new growth opportunities in our existing markets.” UBS Investment Bank acted as lead financial advisor while BNP Paribas acted as co-advisor to Zain on this transaction. Linklaters acted as Legal Adviser for Zain in this transaction. Zain has so far made $2.7 billion in profits from the sale of its African assets to India’s Bharti Airtel, the company’s chairman told Arabiya TV on Tuesday. By the time Zain receives all its dues from the deal, the figure will be higher, the company’s Chairman, Assad al-Banwan, told the Dubai-based TV hours after the two telecoms majors closed the $9 billion deal.

Profits
For Zain profits from the Bharti deal will be booked in the second quarter, Chief Executive Nabeel bin Salama said, and a dividend will be paid in 2011, with Zain’s board to recommend a dividend of 200-240 fils per share from deal returns. The company is not in talks for further asset sales, he added. Bharti, which is 32 percent owned by Singapore Telecommunications Ltd, looked to Zain for building a major presence in Africa only after it twice failed to finalise tie-ups with South Africa’s MTN Group Ltd, the continent’s biggest operator. “We were fortunate that we got a second chance, and a better chance,” Sunil Mittal, chairman of Bharti Airtel, said.

The deal with Zain still encountered obstacles, including a dispute about the minority ownership of Zain’s operations in Nigeria, the biggest market in the deal, but Bharti said on Tuesday it had settled a dispute with one of Zain Nigeria’s minority shareholders, Broad Communications Group. Oba Otudeko, who controls Broad Communications, will be made chairman of the Nigerian operations. Another firm, Econet, which owns 5 percent of the Nigeria unit, has been seeking to overturn a 2006 deal whereby Zain — then called Celtel — bought a majority stake in Nigerian mobile operator Vee Networks Ltd, now Zain Nigeria.