Omantel continues move on Zain by increasing stake to 21.9%

By:
Alan Burkitt-Gray
Published on:

Zain valued at $10bn as total Omantel bill comes to $2.2bn after buying second stake in Kuwaiti operator

Omantel, 51% owned by the government of Oman, is set to become the second biggest shareholder in Kuwait-based operator Zain.

The company is to buy a 12.1% stake in Zain which, together with the 9.8% stake it bought in August, will take it up to 21.9% of the mobile operator group.

In August it paid the equivalent of $846 million. This week it has paid $1.35 billion for the extra 12.1% – meaning a total payment of $2.2 billion, a sum that values Zain at around $10 billion.

Omantel said it “will finance this transaction with a combination of long-term and bridge loan facilities. The bridge loan facility will subsequently be taken out through long-term capital markets instruments.”

Analysts were surprised at the high price. Omar Maher, an analyst with EFG Hermes, told The National, a newspaper based in Abu Dhabi: “We find it difficult to justify Omantel’s offer price for Zain Group, especially when bearing in mind the latter’s rather challenging geographic exposure.” Kuwait, Iraq and Sudan are “the main contributors” to Zain’s value, said Maher.

Omantel will buy its stake from existing shareholders in Zain, said the company, listing Al Khair National for Stocks & Real Estate Company, Kuwaiti British Readymix Company and Gulf National Holding Company as the sellers. Al Khair National for Stocks and Real Estate Company and Kuwaiti British Readymix Company are both subsidiaries of the Al-Kharafi Group which controls Zain.

The deal will be done under the rules of the Kuwait stock exchange. It will give Omantel representation on the board of Zain, said the Omani company, which itself is listed on the Muscat stock exchange.