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Zain’s heady stake sale could disappoint
Zain by name, zany by nature. A group of Indian telecoms companies and a Malaysian billionaire have promised to shell out an eye-watering $13.7 billion for 46 percent of the Kuwaiti telecoms operator, the Arab world’s third largest.
But minority investors hoping to cash out may have to think again. First, the offer has been engineered by — and for — the family-owned Kharafi Group, which is selling 20 percent of Zain, and its associates. Second, there’s no guarantee the deal will actually be completed.
Even Kharafi reckons it will take another four months to complete the sale, which involves the consortium paying 2 dinars per share, a chunky 45 percent premium over Zain’s current price.
There is also considerable uncertainty about who exactly some of the mooted buyers are. Little is known about India’s Vavasi Group or Malaysian billionaire Syed Mokhtar al-Bukhary, who have teamed up with Indian regional telecom companies Bharat Sanchar Nigam and Mahanagar Telephone Nigam.
Bracing for bar brawl in mobile phone emerging markets
The last thing that the complex negotiations between India’s Bharti and South Africa’s MTN Group to create the world’s third largest mobile phone company needed is more complexity. The existing deal involving an intricate mix of cash and stock is further complicated by currency fluctuations and diverging growth rates between the maturing Indian market and the wide-open African one.
But if a third company, Zain of Kuwait, succeeds in starting up a full-scale bidding war for itself, the Bharti-MTN deal could come off the rails and fall apart. Zain’s CEO told Kuwaiti daily Al-Rai on Monday that it is in talks with three major, but so-far unnamed telecom firms, including one from India. Last month, Zain said it was reviewing the possible sale of its far-flung African operations after French conglomerate Vivendi called off talks to buy a majority of Zain’s African business. A Vivendi spokesman says nothing has changed since then. There’s no word yet from other obvious suspects — France Telecom or Vodafone — on whether they are interested.
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