Etisalat Buys Over Half of Zain, Google Startup King Says Middle East Prime

Etisalat and Alkhair have agreed to enter into an exclusive discussion for a limited period of time," the telco added.

Al Khair said in a separate statement that it had accepted Wednesday's offer by Etisalat in respect to Zain.


Etisalat has submitted an offer to buy 46% of Zain's total outstanding shares at 1.7 Kuwaiti dinars ($6.1) a share, which will give it a 51% stake in the Kuwaiti operator after excluding treasury shares.


"The announcements give greater clarity to the proposed transaction," said Irfan Ellam, vice president of research at Al Mal Capital."


Etisalat now intends to take a 51% stake in Zain, excluding the treasury shares. This means that a greater number of Zain's minority shareholders should benefit from Etisalat's offer.


After the deal 25% of Zain will be owned by Kuwait Investment Authority, 10% treasury shares and 14% free float."Etisalat, the region's biggest telecom provider by market value, in late September offered to buy the 46% stake, in a deal worth about $11.7 billion, making it potentially one of the biggest corporate transactions of recent times in the Middle East and fueling Etisalat's regional expansion strategy."


The deal provides excellent integration into Etisalat's operations, taking into consideration that Zain's geographic footprint complements that of Etisalat to a large extent, and these are the Sudan, Iraq, Kuwait, Jordan, Bahrain, Lebanon and Morocco markets. We believe that this deal represents excellent value for our shareholders," Etisalat chairman Mohammad Omran said in the statement.


The U.A.E. telco said its proposal will terminate unless the parties have entered into "definitive transaction documents by 15 January 2011." Due diligence is expected to take a number of weeks, and if signed the transaction is unlikely to close before the end of the first quarter of 2011, Etisalat said.


The operator added that its updated proposal was subject to several conditions, including the disposal of Zain's entire stake in its Zain Saudi unit. Etisalat operates Etihad Etisalat, or Mobily in Saudi Arabia.


Analysts previously said one sticking point for a possible deal could be Zain's Saudi operations where it competes with Mobily. Other conditions include the completion of satisfactory due diligence, the receipt of all applicable regulatory approvals, and having no material adverse change in Zain's business, financial or regulatory affairs, Etisalat said.


Zain spokesman Antoine Aboukhalil said the company's board "will need to meet and advise the management.


Etisalat shares closed flat at 11 U.A.E. dirhams ($3) Wednesday, while Zain fell 1.4% to KWD1.400.Etisalat in October posted a 23% drop in third-quarter net profit to AED1.74 billion, compared with AED2.25 billion a year ago.


The telco currently operates in 18 countries throughout the Middle East, Africa and Asia, with more than 100 million subscribers, according to its website. The company said last quarter that total mobile subscribers in the U.A.E. stood at 7.8 million by June 30.


* Etisalat, which already has a share purchase agreement with PTCL of Pakistan and also other mobile operations throughout Africa and the Middle East, would exponentially increase its power throughout the same areas in acquisition of 51% of Zain.


Zain is a leading telecommunications operator across the Middle East and Africa providing mobile voice and data services to over 70 million active customers as at 30 September, 2009 with a commercial presence in 23 countries.



Zain operates in the following countries: Bahrain, Burkina Faso, Chad, the Republic of the Congo, the Democratic Republic of the Congo, Gabon, Ghana, Iraq, Jordan, Kenya, Kuwait, Malawi, Madagascar, Niger, Nigeria, Saudi Arabia, Sierra Leone, Sudan, Tanzania, Uganda and Zambia. In Lebanon, the company manages ‘mtc-touch' on behalf of the government. In Morocco, Zain owns 31% of Wana Telecom through a joint venture.



Zain offers innovative services in its markets such as ‘One Network', the world's first borderless mobile telecommunications network enabling customers when abroad to receive calls and sms without charge and to make voice and data calls at local rates throughout 22 countries in Africa and the Middle East. This service allows a customer to top up airtime in their home country or from more than 1,000,000 outlets within Zain's ‘One Network' footprint.



The Zain brand is wholly owned by Mobile Telecommunications Company KSC, which is listed on the Kuwait Stock Exchange (Stock ticker: ZAIN). Zain is listed in the Financial Times' Global 500 Index which ranks the world's largest companies based on market capitalization. For more, please visit www.zain.com  or email info@zain.com.


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