[reuters] Mobile Telecommunications Co. Kuwait's biggest mobile operator, has gained majority control of Palestine Telecommunication Co (Paltel) as the company strives to expand in its biggest markets.
Zain bought a 56 percent stake in Paltel, which has 1.5 million mobile subscribers and operates in the West Bank and Gaza Strip, in a share swap, board members said on Monday.
Asked why Zain was interested in the Palestinian mobile market, which has a low 35 percent penetration rate and offers more potential for growth, Chief Executive Saad Barrak said: "The Arab world, the Middle East and Africa is a direct strategic market and we have to be in every corner of our strategic markets."
Zain, whose biggest shareholder is Kuwait's soverign wealth fund, is spending billions to expand and operates in 22 countries in the Middle East and Africa. Earlier this month, a Zain-led consortium was given Iran's third mobile licence.
Officials from Zain and Paltel, which has had a record year of profits, signed their deal in the Jordanian capital Amman on Monday.
An industry source said the deal was finally sealed after resolving several hurdles raised by Paltel's board that had insisted the newly formed entity should be free from any legal liabilities of Zain.
The officials said the deal, which entails no cash transaction between Zain and Paltel, set up a new entity that gives Paltel shareholders ownership of Zain's wholly owned Jordanian subsidiary in return for Zain securing majority control in a combined entity.
The Kuwaiti firm said in January it was in advanced talks to become a strategic partner in PalTel.
A second Palestinian mobile network, Wataniya, is expected to come into operation this year. Wataniya is owned by Qatar Telecommunications Co. QTEL.QA and the Palestinian Authority's Palestinian Investment Fund.
Kuwait's Zain buys majority stake in Paltel
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