Abu Dhabi-listed Etisalat's  attempt to buy a stake in Kuwaiti rival Zain for $12 billion has failed, a Zain source said, after the deal's architect walked away.   

National Investments Co (NIC), the investment firm owned by Zain's major shareholder Kharafi Group, on Tuesday said its commitment to sell a 46 percent stake to UAE's Etisalat was over.

'The bourse announcement proves that the deal has failed. The deal was announced in Sept. 29 and there was no progress at all,' the source said speaking in condition of anonymity.    

A key regulatory requirement for Etisalat's deal to go ahead - the sale of Zain's stake in affiliate Zain Saudi - was already in doubt after Zain turned down three bids for the stake in late February.   

Kuwaiti family conglomerate, the Kharafi group, has led the stake sale to Etisalat through its NIC unit, angering other Zain shareholders that are bitterly opposed to the deal.

A due diligence deadline of Feb. 28 expired without comment from either Zain or Etisalat.   

Last week, Etisalat said it would complete bank financing and due diligence for the planned acquisition of Zain by the end of February.   

'By now the closing of the deal should have been completed, not the due diligence report,' the Zain source said.   

CNBC Arabiya quoted informed sources as saying Etisalat had said it would like the selling parties to extend the deadline for due diligence. Etisalat was not immediately available for comment.   

Tuesday's statement was issued on the Kuwaiti bourse website after market hours. NIC shares ended 7.1 percent lower, while Zain fell 1.5 percent on the Kuwait bourse prior to the announcement. Etisalat dropped 0.5 percent on the Abu Dhabi bourse. - Reuters