Persian Gulf - Etisalat has made an offer for a major stake in Zain in order to expand its footprint in MENA

[khaleej times] Emirates Telecommunication Corporation, or etisalat, has made an initial offer to buy a major stake in Kuwait’s mobile operator Zain, a spokesman of the UAE telecom operator 
confirmed.

Commenting on media reports about an offer to acquire a 46 per cent stake in Zain at a price of $5.97 a share, the official spokesman of the Abu Dhabi-based etisalat did not confirm the price or the percentage of the conditional offer.

However, media speculation put the value of acquisition at $10.5 billion.

“On Wednesday, etisalat’s share price rose to Dh10.85, gaining 40 fils in the last five trading sessions in anticipation of an imminent acquisition this time,” Bassam Ramahi, general manager at Shuaa Securities in Abu Dhabi told Khaleej Times.

Zain, which did not confirm the offer, saw its share prices gaining 7.9 per cent to close at $4.77, lifting the Kuwait Stock Exchange index to close up by 0.85 per cent to 6,928 points.

“It’s a good news for the equity market,” he said, after a confirmation from etisalat.

Ramahi said both telecom firms stand to benefit from any such deal, as it would complement their business.

“For etisalat, it would be expansion in customer base in MENA (Middle East and North Africa) market where it is trying to step in,” Ramahi said, adding “a significant per cent of stake means it would boost etisalat’s revenues and profit.”

The offer depends on “certain requirements and conditions,” Ahmed bin Ali, the spokesman for etisalat said.

The bid is for all Zain assets controlled by shareholders who own about 46 per cent of the company, including operations in Saudi Arabia, a newswire reported quoting a source.

In March this year, the Kuwait firm sold its operations in 15 African nations to India’s Bharti Airtel for $10.7 billion, netting a profit of more than three billion dollars from the deal.

Besides Kuwait, Zain operates in Saudi Arabia, Bahrain, Sudan, Jordan and Iraq, Lebanon and Morocco.

Before striking the deal with Bharti, Zain held unsuccessful negotiations with an Indo-Malaysian consortium to sell 46 per cent of the company for about $14 billion.

A purchase would extend etisalat’s reach in the Middle East, where Zain still operates in countries from Kuwait and Iraq to Bahrain after selling most of its African assets this year to Indian billionaire Sunil Mittal’s Bharti Airtel Ltd for $9 billion.

Etisalat offers telecommunications services in 18 countries in the Middle East, Africa and Asia, counting more than 100 million customers.

Zain had 34.2 million customers at the end of the first half.

Kuwait Investment Authority, the country’s sovereign wealth fund, is Zain’s largest shareholder with 24.6 percent, while the Kharafi Group is the second-largest shareholder, owning about 13 per cent shareholding.

Last month, Zain reported a first-half net income of $3.1 billion, aided by a $2.65 billion gain from the African asset sale. Consolidated revenue from Zain’s Middle East operations rose 10 per cent from a year earlier to $2.33 billion, it said.

Etisalat bids for Zain stake