Archive for the ‘Region: Africa’ Category

Glencore Considering $19.5 Billion Bid for ENRC…

Monday, June 13th, 2011

You thought you had heard the last of Swiss based Glencore, the famed diversified commodities trading firm, with the news of its multi-billion dollar IPO.  Now rumors of a nearly $20 billion takeover?  Looks like Glencore’s management team is taking advantage of its new currency.  According to ENRC’s 3 founders, Alexander Mashkevitch, Patokh Chodiev and Alijan Ibragimov, who control 45% of the company, Glencore’s CEO recent discussed a possible merger.  ENRC, a Kazakhi miner, trades at a 15% discount to its peers, using a trailing P/E multiple, and is down almost 30% this year.

HISTORY OF GLENCORE

Glencore, headquartered in Baar, Switzerland, is the world’s largest commodities trading firm, which a 60% market share in the trading of zinc, and a 3% market share in the trading of crude oil.  The company is also the biggest shipper of coal in the world.  Glencore’s 485 traders own and run the company today.  It was formed by a management buyout of Marc Rich & Co AG in 1974.  Marc Rich, now a billionaire commodities trader at the time was charged with tax evasion and illegal business dealings, fleeing to Iran.  Years later, he was pardoned by President Bill Clinton.

In 1994, after failing to corner the zinc market, the company lost $172 million and nearly went bankrupt, forcing Rich to sell his share in the company back to the firm, which was renamed Glencore.  It was run by Rich’s inner circle, including Willy Strothotte and Ivan Glasenberg.

Over the years, Glencore has also been accused of illegal dealings with rogue states, including the USSR, Iran, and Iraq (under Hussein).  It has a history of breaking UN embargoes to profit from corrupt regimes.

The company owns stakes in Rusal, Chemoil, Xstrata, Minara Resources, PASAR, Evergreen Aluminum, Katanga Mining, Windalco, OAO Russneft, and many other firms.

INITIAL PUBLIC OFFERING

With its initial public offering weeks ago, Glencore was valued at about $60 billion, and raised about $10 billion.  Each of the 485 traders received average payouts of $100 million through the flotation.

I highly recommend reading, “Secret Lives of Marc Rich.”

Video: Libyan Jet Shot Down by Rebel Artillery, Brent Crude Oil Futures Unchanged

Saturday, March 19th, 2011

The video below (LA Blog Only) shows Rebel artillery taking out a Libyan fighter, after the ceasefire was announced and crude fell $2.00 on Friday.  It is not surprisingly that Qaddafi did not honor the ceasefire after killing thousands of his own people in the weeks prior to the incident.  According to UN Ambassador Susan Rice, “Qaddafi’s attacks on Benghazi will not be tolerated by the Western community.”

A warplane was today shot down outside the opposition stronghold of Benghazi, as international leaders including David Cameron gathered in Paris to make final preparations to impose a no-fly zone over Libya.

The jet was observed over the city for some time before reportedly going down in flames, amid the sound of artillery and gunfire.

[youtube]http://www.youtube.com/watch?v=XvwISqREkaU[/youtube]


But Libyan authorities insisted that their forces were holding to a ceasefire announced yesterday and repeated an invitation for international observers to enter the country today to monitor it.

Deputy foreign minister Khaled Kaim told BBC Radio 4′s Today programme: “The ceasefire is real, credible and solid. We are willing to receive observers as soon as possible, even today.”

Rebel sources claim that military assaults by forces loyal to Muammar Gaddafi on cities including Benghazi, Misrata and Ajdabiya continued even after the ceasefire announcement.

US ambassador to the UN Susan Rice last night said the Libyan leader was already in violation of the United Nations Security Council resolution 1973, passed on Thursday, which called for an immediate end to hostilities and authorised “all necessary measures” short of foreign occupation to protect civilians.

Ms Rice told CNN that Gaddafi would face “swift and sure consequences including military action” if he ignores demands for a ceasefire.

Mr Cameron was today meeting US Secretary of State Hillary Clinton, French President Nicolas Sarkozy, UN Secretary General Ban Ki-moon and representatives of Arab states in Paris for talks on the implementation of the resolution.

RAF fighter jets were deploying to the Mediterranean to join the international effort to protect Libya’s people from aerial assault by Gaddafi’s forces.

Neither the Ministry of Defence nor Downing Street would last night confirm whether any RAF planes had set off on their mission, codenamed Operation Ellamy, or where they would be based in the Mediterranean.

Mr Cameron yesterday said that Typhoons and Tornados, together with surveillance and air-to-air refuelling craft, would be ready to leave within hours.

France’s ambassador to the UN, Gerard Araud told the BBC that today’s summit would be “a good moment to send the last signal” to Gaddafi.

“I guess that after this summit, in the coming hours we will go to launch the military intervention,” said Mr Araud.

In a joint statement last night, Britain, the US and France – supported by a number of unnamed Arab states – spelt out exactly what was expected from the long-serving Libyan tyrant.

“All attacks against civilians must stop. Gaddafi must stop his troops from advancing on Benghazi, pull back his troops from Ajdabiya, Misrata and Zawiyah, and re-establish water, electricity and gas supplies to all areas,” said the statement.

“Humanitarian assistance must be allowed to reach the people of Libya.”

And the allies warned: “These terms are not negotiable. If Gaddafi does not comply with the resolution, the international community will impose consequences, and this resolution will be enforced through military action.”

Speaking in the White House after conferring with congressional leaders yesterday, US President Barack Obama stressed that Britain, France and the Arab League would take a “leadership role” in enforcing the no-fly zone and said that there would be no use of US ground troops in Libya.

While he did not say what forces the US would be committing to the operation, he suggested some American military assets would be deployed in an “enabling” role in support of the Europeans.
“We will provide the unique capabilities that we can bring to bear to stop the violence against civilians, including enabling our European allies and Arab partners to effectively enforce a no-fly zone,” he said.

Mr Cameron insisted Libya would not be “another Iraq” and there would be “no foreign occupation”.

“The central purpose of all this is clear: to end the violence, protect civilians and allow the people of Libya to determine their own future, free from the brutality inflicted by the Gaddafi regime,” he told the Scottish Conservative conference in Perth.

Britain was committing itself to military action “at a level that matches our resources, in alliance with other countries, with the full authority of the United Nations Security Council and in accordance with international law”.

“We will provide the unique capabilities that we can bring to bear to stop the violence against civilians, including enabling our European allies and Arab partners to effectively enforce a no-fly zone,” he said.

But Libyan authorities insisted that their forces were holding to a ceasefire announced yesterday and repeated an invitation for international observers to enter the country today to monitor it.

Deputy foreign minister Khaled Kaim told BBC Radio 4′s Today programme: “The ceasefire is real, credible and solid. We are willing to receive observers as soon as possible, even today.”

Rebel sources claim that military assaults by forces loyal to Muammar Gaddafi on cities including Benghazi, Misrata and Ajdabiya continued even after the ceasefire announcement.

US ambassador to the UN Susan Rice last night said the Libyan leader was already in violation of the United Nations Security Council resolution 1973, passed on Thursday, which called for an immediate end to hostilities and authorised “all necessary measures” short of foreign occupation to protect civilians.

Ms Rice told CNN that Gaddafi would face “swift and sure consequences including military action” if he ignores demands for a ceasefire.

Mr Cameron was today meeting US Secretary of State Hillary Clinton, French President Nicolas Sarkozy, UN Secretary General Ban Ki-moon and representatives of Arab states in Paris for talks on the implementation of the resolution.

RAF fighter jets were deploying to the Mediterranean to join the international effort to protect Libya’s people from aerial assault by Gaddafi’s forces.

Neither the Ministry of Defence nor Downing Street would last night confirm whether any RAF planes had set off on their mission, codenamed Operation Ellamy, or where they would be based in the Mediterranean.

Mr Cameron yesterday said that Typhoons and Tornados, together with surveillance and air-to-air refuelling craft, would be ready to leave within hours.

France’s ambassador to the UN, Gerard Araud told the BBC that today’s summit would be “a good moment to send the last signal” to Gaddafi.

“I guess that after this summit, in the coming hours we will go to launch the military intervention,” said Mr Araud.

In a joint statement last night, Britain, the US and France – supported by a number of unnamed Arab states – spelt out exactly what was expected from the long-serving Libyan tyrant.

“All attacks against civilians must stop. Gaddafi must stop his troops from advancing on Benghazi, pull back his troops from Ajdabiya, Misrata and Zawiyah, and re-establish water, electricity and gas supplies to all areas,” said the statement.

“Humanitarian assistance must be allowed to reach the people of Libya.”

And the allies warned: “These terms are not negotiable. If Gaddafi does not comply with the resolution, the international community will impose consequences, and this resolution will be enforced through military action.”

Speaking in the White House after conferring with congressional leaders yesterday, US President Barack Obama stressed that Britain, France and the Arab League would take a “leadership role” in enforcing the no-fly zone and said that there would be no use of US ground troops in Libya.

While he did not say what forces the US would be committing to the operation, he suggested some American military assets would be deployed in an “enabling” role in support of the Europeans.

Mr Cameron insisted Libya would not be “another Iraq” and there would be “no foreign occupation”.

“The central purpose of all this is clear: to end the violence, protect civilians and allow the people of Libya to determine their own future, free from the brutality inflicted by the Gaddafi regime,” he told the Scottish Conservative conference in Perth.

Britain was committing itself to military action “at a level that matches our resources, in alliance with other countries, with the full authority of the United Nations Security Council and in accordance with international law”.

Most Common Face in the World – National Geographic

Thursday, March 3rd, 2011

National Geographic Magazine released a video clip, below, showing the most “typical” human face on the planet as part of its series on the human race called “Population 7 billion.”

The researchers conclude that a male, 28-year-old Han Chinese man is the most typical person on the planet. There are 900 million of them.  No wonder I see so many on Wall Street.  The Chinese are showing prowess both at home and abroad!

The image above is a composite of nearly 200,000 photos of men who fit that description.

Don’t get used to the results, however. Within 20 years, the most typical person will reside in India.

A similar resource exists for the most common female faces in the world. According to UK Daily mail, these are the average faces of women from 24 different nations, all quite beautiful. Observations here include that Peruvians and Iranians have bigger mouths, Ethiopians and Samoans have curlier hair, and fringes seem to be big in Latvia and Poland.

Some anomalies can be explained by how the pictures were compiled. The prevalence of mousy hair is a result of blondeness being easily ‘diluted’.

South African Photographer Mike Mike – who inspired the images with a web project called The Face of Tomorrow compiling the faces of various cities – explains: ‘Blonde hair gets lost pretty quickly when you start averaging.

‘You’d need a population 75 per cent blonde to get it visibly remaining. You’d probably have to go to Iceland for that result.’ Please see their pictures below:

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Rebel Libyans Get Ready to Attack Tripoli

Sunday, February 27th, 2011

Yesterday, I saw at least 600 New Yorkers with the rebel Libyan flag protesting in Times Square…It has been weeks since a semi-deranged Ghaddafi/Qaddafi/Khaddafi/Kadafi waged war on his people.  With tons of mustard gas in storage and hired mercenaries being paid $2,000/day to open fire on women and children, it surprises me that the man has not yet been deposed.  Western Libya is now in the hands of rebels, who also control Zawiya, the third largest city in the country, miles away from Tripoli.  There are 6 check-points between Zawiya and Qaddafi, and the dictator seems to be getting nervous that an attack is being planned.  This weekend, he announced $400 awards for all Libyan citizens and interest-free loans for the purchase of apartments.  If the man really cared about his people, he would have acted before 850,000 barrels (of 1.6mm) of daily oil capacity was shut down by foreign interests, €20 million of his assets were frozen in the U.K., and 90% of his 45,000 man army left his control.

The streets of Tripoli are deserted, as citizens fear being shot out in the open.   They hide in their homes as their food reserves dwindle…many without cell phone or internet service.  And this is the 21st century?  The per capita GDP of Libya is about $12,000, but most don’t realize that most of this is in the form of oil revenue captured by the government.  With soaring commodity prices, many young Libyans are hungry and unemployed.  They are leading the attack on Qaddafi, and they don’t want/need any help: “They don’t want to be rescued, they don’t want any military intervention,” Garcia-Navarro reported from Benghazi. “They have done this themselves, they say, and they will get rid of Moammar Gadhafi finally themselves, as well.”

“Rebel forces in the city closest to Libya’s capital braced for a possible counterattack by troops loyal to Moammar Gadhafi on Sunday, as opposition leaders in the east announced a national council to serve as the face of the uprising.

Hundreds of opposition fighters with tanks and truck-mounted anti-aircraft guns occupied the center of Zawiya, about 30 miles west of the capital, Tripoli, according to The Associated Press. Gadhafi forces were positioned on the outskirts of the city, which is close to an oil port and refineries.

The tricolor flag of the former Libyan monarchy — now a symbol of revolution — flew from one of the bullet-riddled buildings in Zawiya. Hundreds of people chanted “Gadhafi out” and “Free, Free Libya.” Many streets were blocked by palm tree trunks or metal barricades, and an effigy of the Libyan leader hung from a light pole in the main square with “Execute Gadhafi” emblazoned across its chest.

There were at least six checkpoints controlled by troops loyal to Gadhafi on the road from Tripoli to Zawiya, the AP reported. Each checkpoint was reinforced by at least one tank, and the troops concealed their faces with scarves.

Militiamen and pro-Gadhafi troops were repelled last week when they launched attacks trying to take back opposition-held territory in Zawiya and Misurata in fighting that killed at least 30 people.

Gadhafi loyalists remain in control of the capital, Tripoli, which was reported to be quiet early Sunday, with most stores closed and long lines outside the few banks and bakeries open for business. Traffic in the city was close to its normal level.

Residents thronged Tripoli’s banks Sunday after state TV announced that each family would receive $400 as well as credits for phone service and interest-free loans to buy apartments.

Protesters Say They Don’t Want Foreign Intervention

A bloody government crackdown on the uprising that began nearly two weeks ago in the eastern city of Benghazi prompted the U.N. Security Council to slap sanctions on the regime Saturday. The resolution imposes a travel ban and foreign asset freeze on Gaddafi and his inner circle as well as a weapons embargo against the country.

It also demands an immediate end to violence that it says may amount to crimes against humanity and refers the regime’s crackdown on protesters to the International Criminal Court for possible prosecution.

“The text sends a strong message that gross violations of basic human rights will not be tolerated and those responsible for grave crimes will be held accountable,” U.N. Secretary-General Ban Ki-moon said after the unanimous vote by all 15 member nations.

NPR’s Lourdes Garcia-Navarro said the vote is being met with a more muted response among anti-government protesters in the liberated east of Libya. They welcomed the U.N. action, but feel the international community didn’t move until foreign nationals were evacuated out of the country. Protesters also made clear that they do not welcome foreign intervention in Libya.

“They don’t want to be rescued, they don’t want any military intervention,” Garcia-Navarro reported from Benghazi. “They have done this themselves, they say, and they will get rid of Moammar Gadhafi finally themselves, as well.”

A number of former top aides have deserted Gadhafi since the uprising began 11 days ago, and even the Libyan dictator’s Ukrainian nurse reportedly plans to flee the violence and return home.

Halyna Kolotnytska, 38, is joining senior government officials, diplomats and pilots who have left Gadhafi’s inner circle, according to Ukrainian newspaper reports citing Kolotnytska’s daughter Tetyana.

Ex-Justice Minister Chosen To Head Opposition

As Gadhafi’s control over the country dwindles, opposition leaders on Sunday appointed a former justice minister who defected in the early days of the uprising to head a national council. Mustafa Abdel-Jalil was chosen by the committees running the eastern Libyan cities now in the rebellion’s hands, according to Benghazi city council member Fathi Baja.

“It’s a symbol here, people say, of the fact that they will never acquiesce to be under Gadhafi’s rule,” Garcia-Navarro said in Benghazi, which rebels have described as the capital of “Free Libya.”

Abdel-Jalil, who resigned last week, has accused Gadhafi of ordering the 1988 bombing of the Pan Am flight that killed 270 people, mostly Americans, over Lockerbie, Scotland. The bomber, Abdel Baset al-Megrahi, was released from prison amid controversy and returned to Tripoli in August 2009 on the grounds that he was suffering from prostate cancer and would die soon.

A Libyan rebel fighter displays heavy caliber ammunition found at a military barrack in Benghazi on Sunday.

In an interview with The Sunday Times of London, Abdel-Jalil said the bomber threatened to provide evidence that Gadhafi masterminded the bombing and blackmailed the Libyan leader into securing his release. Gadhafi plowed $80,000 a month into a fund that paid for legal fees, lobbying and family visits to the prison, according to the Times report.

Secretary of State Hillary Clinton said Sunday that the U.S. is “reaching out” to Libyans trying to organize a post-Moammar Gadhafi government and is “ready and prepared to offer any type of assistance.”

“We are just at the beginning of what will follow Gadhafi,” Clinton told reporters en route to a U.N. meeting in Geneva.

Britain revoked diplomatic immunity for Gadhafi and members of his family, and Italy’s suspended a treaty with Libya that includes a nonaggression clause — removing a possible obstacle to Rome taking part in any peacekeeping operations in Libya or allowing the use of its military bases.

Italian Foreign Minister Franco Frattini said Sunday that “de facto suspension of this treaty, even without declaring it, is already a reality.” He said that when there is no government infrastructure, as is the case now in Libya, a treaty is suspended.

President Obama said Saturday for the first time that Gadhafi should step down.

“When a leader’s only means of staying in power is to use mass violence against his own people, he has lost the legitimacy to rule and needs to do what is right for his country by leaving now,” the White House said in a statement, summarizing a telephone conversation between Obama and German Chancellor Angela Merkel.

Clinton said the U.S. is revoking visas for senior Libyan officials and their immediate family members and that future applications from those blacklisted for travel to the United States would be rejected.

The U.S. tone shifted sharply on Friday after Americans in Libya were evacuated from the country by ferry and a chartered airplane.

Amid Evacuations, Some Left Stranded

The U.N. High Commissioner for Refugees reported Sunday that about 100,000 people, mostly foreign migrant workers, have fled over Libya’s borders into neighboring Tunisia and Egypt in the past week — creating a growing humanitarian crisis.

Egyptian people fleeing Libya race to get on buses at the Ras Jedir border post, near the Tunisian city of Ben Guerdane, on Sunday.

“We call upon the international community to respond quickly and generously to enable these governments to cope with this humanitarian emergency,” U.N. High Commissioner for Refugees Antonio Guterres said. The agency has begun to airlift relief supplies to Tunisia for the refugees at the border.

Western nationals have scrambled to get out of Libya as the level of chaos continues to rise. Germany’s foreign minister said the country’s air force has rescued 132 people during a secret military mission involving two German military planes that landed on an undisclosed runway in the Libyan desert.

In a daring rescue Saturday, British military planes entered Libyan air space to collect 150 people, Defense Secretary Liam Fox said. The C-130 Hercules planes, carrying Britons and other nationals, safely landed in Malta after picking up the civilians south of the eastern Libyan port of Benghazi, he said.

But NPR’s Garcia-Navarro reports that others in Benghazi haven’t been as fortunate.

“There are people who have been left behind, citizens of poorer countries who simply haven’t been able to get a boat out of here,” she said. “I’m talking about Bangladeshis, Somalis, and I’m also talking about sub-Saharan Africans.”

Tens of thousands of foreigners in Libya work at oil installations and construction companies, and many of them are sub-Saharan Africans. Some of them left stranded in Benghazi said they have been targets of violence because people believed that they were mercenaries sent in by Gadhafi to quell the unrest in the east.

“They tell terrifying stories of having to hide in the desert to avoid beatings and even killings,” Garcia-Navarro said.

Tunisia’s Prime Minister Quits

Tunisia’s embattled prime minister said Sunday that he will resign, bowing to a key demand of protesters after at least five people died in a groundswell of new unrest in this North African country.

Mohamed Ghannouchi, 69, was seen as a holdover from the old regime by Tunisians behind the so-called Jasmine Revolution that toppled autocratic President Zine El Abidine Ben Ali a month ago. Tunisia was the first Arab country to rise up in revolt against its rulers.

“I am not ready to be the man of repression, and I will never be,” Ghannouchi said in an appearance on state television. He did not say when his resignation would take effect.

He warned that unspecified forces appeared to be swelling to try to quash the move toward democracy, saying, “There are signs that a plot is being hatched to cause the revolution to fail.”

Deadly Clash Reported In Oman

Riot police in Oman clashed with pro-democracy protesters Sunday, killing at least one in a sharp escalation of tensions in the tightly ruled Persian Gulf nation.

Witnesses told the AP that police fired tear gas and rubber bullets at protesters in Sohar, about 120 miles northwest of the capital, Muscat. The deadly clash marked the second day of protests and suggests that a government shake-up by Oman’s ruler on Saturday failed to quell the tensions.

Protesters Reject Offer Of Talks In Bahrain

Thousands of people in Bahrain rallied peacefully in the capital city’s streets Sunday, rejecting the monarchy’s appeals for talks to end a nearly two-week uprising in the tiny island nation.

At least three processions paralyzed parts of the capital, Manama, and appeared to reflect a growing defiance of calls by Bahrain’s rulers to hold talks to ease the increasingly bitter showdown in the strategic island nation, home to the U.S. Navy’s 5th Fleet.

“No dialogue until the regime is gone,” marchers chanted as they moved through the highly protected zone of embassies and diplomatic compounds.

NPR’s Deborah Amos reported from Pearl Square, which has been that heart of the demonstrations, that people were headed to the office of the prime minister to demand his resignation.

Protesters shouted slogans against King Hamad bin Isa Al-Khalifa plastered fences with flyers denouncing security forces for attacks that have killed seven people since the first protests Feb. 14 inspired by revolts in Tunisia and Egypt.”

With reporting from NPR’s Lourdes Garcia-Navarro in Benghazi, Libya; Deborah Amos in Manama, Bahrain; Larry Miller in London; Tom Gjelten in Tunis, Tunisia; Sylvia Poggioli in Rome; and Linda Fasulo in New York. This story contains material from The Associated Press.

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Sahara Desert Solar Project

Wednesday, March 10th, 2010

Solar projects have been rampant since 2006.  After slowing down in 2008, projects in the solar space, despite declining subsidies in Germany and Spain, have been getting more and more attention.  The latest news involves, Siemens and Munich Re (A REINSURANCE COMPANY!) teaming together to launch solar fields in the Sahara desert that could generate power for European countries.  Morocco would be the first target for the venture.


According to Jeremy Van Loon of Bloomberg,  “Siemens AG and Munich Re’s plan to develop solar-electricity generators in the Sahara Desert aims to win above-market prices for the energy they would export to Europe, the project chief said.

The Desertec Industrial Initiative will work with Morocco in the next month to arrange negotiations with the European Union to provide so-called feed-in tariffs for electricity produced by using large mirrors in the desert, Paul van Son, who heads the initiative, said today in an interview.

“We’re just at the beginning of this, and we’re putting together a work package with Morocco first,” he said in Berlin. “The difficult part is putting all the pieces together while dealing with so many different governments and structures.”

Feed-in rates, or above-market prices subsidized by consumers, are used in most EU countries as incentives for producing more electricity and heat from wind turbines, solar panels and wood pellets. Currently there are no such premium prices available for renewable energy exported from North Africa to the 27-member European bloc, van Son said.

Desertec is part of a plan to reduce Europe’s dependence on fossil fuels such as coal and natural gas for power generation. The developers plan to use curved mirrors that focus sunlight to heat liquids and turn power turbines. The 400 billion euro ($546 billion) plan must also obtain backing from European and African governments as well as investors.

Loan Guarantees

Germany is considering seeking loan guarantees for the project through the European Investment Bank, the country’s economy minister, Rainer Bruederle, said today in Berlin. Part of the goal of Desertec is also to provide energy for North Africa, he added.

“This is the kind of large-scale infrastructure project that the European Investment Bank was created for,” Bruederle said at a press briefing, without providing details.

The project may create as many as 2 million jobs and provide 15 percent of Europe’s power demand by the middle of this century, Siemens and Munich Re have said.

Generating electricity from the desert and delivering it to Europe will require high-voltage cables to move power from sparsely populated areas of North Africa under the Mediterranean Sea to Europe, whose transmission grids already struggle to accommodate power increasingly supplied by solar and wind farms built in the last few years.”

Bharti Telecom Purchases Zain’s African Assets for $10.7 Billion

Monday, February 15th, 2010

bharti

Zain, one of the largest telecom giants in the middle east, just agreed to offload its African assets to India’s Bharti Airtel, in one of the largest Indian mergers in history.  The deal is valued at $10.7 billion U.S.  Zain spent more than $12 billion to enter Africa over the past decade.  Bharti also agreed to buy 70 percent of Bangladesh’s Warid Telecom for an initial investment of $300 million.  The deal was reached because Zain was tired of underperforming telecom assets in Nigeria and Kenya.  It presents the opportunity for Bharti to turn things around.  ~I.S.

Kuwaiti telecom group Zain has agreed to offload its African assets to India’s Bharti Airtel, Kuwait’s state news agency said on Sunday, in a deal valued at $10.7 billion.

Deals

The deal marks one of the biggest cross-border transactions in the Middle East in years and a turning point in the long-running saga around the third-biggest telecoms operator in the region.

“If the transaction values the African operations at $10.7 billion, it would be a nice premium,” said analyst Simon Simonian at investment bank Shuaa Capital. “We expect Zain to pay a special dividend to shareholders from the proceeds.”

The Kuwaiti bourse suspended trading in Zain shares before the open but optimism that the deal would be approved sparked a rally in Kuwaiti shares, pusing the benchmark index up 1.8 percent, in its biggest gain in 6 months.

The sale of Zain’s African positions would mark a strategic reversal that saw the local player rise to international status and then revert to that of a regional player. Zain has spent more than $12 billion alone to expand in Africa since 2005.

Zain’s expansion from Burkina Faso to Zambia and its ubiquitous logo has transformed it into a symbol of national pride synonymous with Kuwait’s faltering aspirations to diversify its economy beyond the oil sector.

“Zain grew a little bit too fast and was facing some growing pains in the past two years,” Simonian said.

Confirmation that India’s Bharti was the bidder showed the telecom operator was back in the hunt for emerging market acquisitions after its planned $24 billion merger with South Africa’s MTN failed in September.

In October, Akhil Gupta, deputy group CEO at the Indian mobile operator’s parent, said Bharti would look at buying a stake in Zain if there was an opportunity.

Last month, Bharti agreed to buy 70 percent of Bangladesh’s Warid Telecom for an initial investment of $300 million. It also set up a new unit to drive its foreign expansion, focused on opportunities in emerging markets where it can replicate its low-price, high-volume model.

Bharti’s home mobile market is facing margin pressures from intense competition and price wars, resulting in lower tariffs and shrinking profits.

TRANSFORMATION

Analysts have pointed to Zain’s underperforming assets in Nigeria and Kenya as a burden on the group but said its large presence in sub-Saharan Africa harbored valuable growth.

The group pulled back from an expansion spree in 2009 and rejected an offer from France’s Vivendi for its African assets. It then halted talks to sell the assets to appease potential buyers of a 46-percent stake in the parent company.

A consortium of Asian investors has been trying to buy the 46 percent stake from Kuwaiti family conglomerate Kharafi Group for 2 dinars per share, or about $13.7 billion, although selling the African operations would likely end that initiative.

In one indication of an imminent deal, Zain last week appointed Nabil bin Salama as the firm’s chief executive, replacing Saad al-Barrak, seen as the driving force behind the growth into 23 countries across Africa and the Middle East.

Barrak resigned earlier this month amid uncertainty about the fate of the sale of the parent company stake.

Last May, Zain announced a rare cut of 2,000 jobs of its 15,500 workforce, signaling that the heyday of expansion might be over.

Africa represents about 62 percent of Zain’s 64.7 million customers but only 15 percent of the groups’s net profit. Zain operates in 24 countries including Saudi Arabia and Nigeria.

Shares in Zain have risen 23 percent since February 4.

(Article by Thomas Atkins, Editing by Mike Nesbit)

For more information, please visit Reuters…

~I.S.