The rationale out of this deal are: The Indian telecom market has almost reached its saturation

point with scope of expansion left only in the inner part of rural India. Being a core telecom company it could not diversify its portfolio into other business and geographic expansion into new markets was the only strategic alternative to escape slowing profit growth in India. The next round of telecom revolution is expected to happen in Africa and this emerging market will be ideal for Bharti Airtels business aspirations in the days to come.

The size of Zain Africa's business diversifies Bharti Airtel's risk portfolio away from its concentration in South Asia. The combined businesses will be able to withstand global business shocks much better and will give it additional leverage in capital investments and with key vendors.
1. This deal will give Bharti a firm foothold in the relatively untapped African markets, making it the worlds fifth largest wireless company in terms of the number of subscriber. 2. The deal will give Bharti 49 million subscribers in 15 African countries, which have combined estimated annual revenue of $6.3 billion.

 3. Airtel can replicate the success of India in Africa.

4. They can make the strategic alliances with other stake holder including Nokia, Singtel & Sony Ericsson. 5. It can learn a lot from Zain expertise in the data service such as 3G and 4G.

6. Zains profitability is lower than Bharti despite average higher spending by its users. The average revenue per user of Zain Africa is quite high and that justifies its current valuation by Bharti Airtel. However, as per an estimate only one in two Africans holds mobile phone and with Zain having a strong presence in most of the countries in Africa, Bharti is well set to dream big in terms of global ambitions.

The Bharti-Zain deal seems to fit with the long term goals of Bharti Airtel. Also, both thecompanies can generate following synergies:
1.
2. 3. 4. 5. 6. 7.

Network infrastructure: Better bargaining power with suppliers, Ease in providing inter-continental ISD services. Technology: Zains expertise in data services (3/3.5G) and Airtels expertise in managing network technologies. BPO and call center : Economies of scale. Shared services: Inter-continental roaming services, marketing. Business model: Bhartis business model could be adopted leading to operating efficiencies and cost savings. Local knowledge: Local knowledge of market within Zains people. Ready customers in a new geography: Cost and time required for setting upoperations and acquiring a customer base in Africa would be huge for BhartiStrategically, the deal makes sense