UAE subsidiary Etisalat is open to selling its 27.5% stake in Saudi subsidiary Mobily, in order to convince local regulators to approve its tie-up with Kuwait’s Zain, TelecomFinance understands.
This contrasts with a report in today’s Financial Times,…
UAE subsidiary Etisalat is open to selling its 27.5% stake in Saudi subsidiary Mobily, in order to convince local regulators to approve its tie-up with Kuwait’s Zain, TelecomFinance understands.
This contrasts with a report in today’s Financial Times, which suggests that Zain would have to sell its 25% stake in Zain Saudi Arabia if Etisalat’s offer is successful.
That report cited an unnamed banker as saying there was “no way” the Saudi regulator would allow a merger between Mobily and Zain Saudi Arabia.
Etisalat yesterday confirmed that it had made a preliminary offer to acquire 46% of Zain for E7.63bn. Influential shareholder the al-Kharafi Group, which owns about 20% of Zain, stated its blessing, while sovereign wealth fund the Kuwait Investment Authority, which owns a further 10%, confirmed the offer without offering a stance.
Mobily is owned by Etisalat (27.5%), Ethiad (7.5%) six local strategic partners (45%), with a further 20% freely floated.
Zain paid SR22.9bn (E4.45bn) for Saudi Arabia’s third licence in 2007, while Etisalat won the kingdom’s second licence.
Zain’s 25% stake in Zain Saudi Arabia is currently valued at almost US1.5bn (E1.1bn).
Etisalat had cash or cash equivalents of about US$3bn (E2.2bn) at the end of 2009, and the FT’s banking source said that UAE sovereign wealth fund the Emirates Investment Authority might help finance the deal, since Etisalat might be unable to do so on its own.
Etisalat is 60% owned by the EIA. The investment company is controlled by the federal UAE government and chaired by Sheikh Mansour bin Zayed al Nahyan, half brother of the current President of UAE, and ruler of Abu Dhabi, Khalifa bin Zayed Al Nahyan.
BNP Paribas is advising the Al-Kharafi family. National Bank of Kuwait is reportedly advising Etisalat, although TelecomFinance understands that Morgan Stanley has this mandate.
Neither Zain nor Etisalat were available for comment at the time of going to press