Zain reviews African operations sale
Kuwait, July 20, 2009
Kuwaiti mobile operator Zain said on Monday it is conducting a strategic review which may result in the sale of its African operations excluding Morocco and Sudan.
'Zain confirms that it is conducting a strategic review with the aim of maximising shareholder value and will only consider approaches that achieve this,' it said in a statement.
The comments came after French media and telecom giant Vivendi said it had called off talks to buy a majority stake in Zain's African telecom operations.
Zain said on Monday it still hoped to sell its African unit despite Vivendi calling off talks to buy a majority stake in the business.
Shares in Vivendi, which has vowed to keep its BBB credit rating intact and maintain its dividend at current levels, rose more than 4 percent after the Paris-based group said talks were "interrupted", while shares in Zain slipped 1.7 percent.
Vivendi said it ended discussions as the investment was not consistent with its financial criteria.
Zain, the Gulf Arab region's third-largest telecoms firm by market value, responded by saying it was still conducting a review of its African unit to maximise shareholder value and would "only consider approaches that achieve this".
Zain, which is being advised by UBS, said several parties had expressed interest in its African operations, although any sale would not include its Moroccan and Sudanese units. "I can't find a tactical reason for selling this operation at this time," said Jithesh Gopi, head of research at Bahrain-based Sico Investments.
"The African operations have affected their profits in the last couple of quarters so this may be a factor. These are operations and investments that require time," said Gopi.
"This (Africa) is one of the only remaining growth markets in the world as far as mobile is concerned and so on," he added.
Zain CEO Saad Barrak told Reuters earlier this month the firm was in early talks with potential buyers for a stake in its African operations and could consider a partner for a 25 per cent stake.
A France Telecom spokesman said it had been named in a Kuwaiti newspaper report as a potential bidder but the company was not interested in acquiring the business.-Reuters