Service issues weigh on Bharti-Zain deal

19.02.2010
The planned US$9 billion acquisition of the African assets of Kuwait's Zain by India's Bharti Airtel will face its major test this year, after the Zain license in Niger was shortened by five years.

Zain was licensed in Niger in 2000 for 15 years, but poor quality of service has led the Niger regulator to put up the license for renewal this year. This is expected to raise issues of valuation of assets as well as questions of what Zain must do to get back the license.

"At end of 2010, Zain should either leave the Niger market or renew its license," said Adamou Iro, a legal and telecom expert in Niger.

Last week, Niger's regulator, Autorite de Regulation Multisectorielle (ARM), announced the reduction of the license duration for Zain by five years, and of Moov (owned by Etisalat) for three years. Both licenses were issued in 2000.

With the decision, ARM has become Africa's most strict regulator, given that countries like South Africa, Rwanda, Nigeria, Kenya and Ghana have only fined operators and threatened to withdraw licenses, but have never done so.

ARM said that unless the services are provided as stated in the service level agreements, it will continue cracking the whip.