Omantel plans to buy further 12% stake in Zain Group

October 09, 2017

Omantel has signed a non-binding letter of intent to purchase an additional 12 per cent stake in Kuwaiti telecommunication firm Zain Group from Kuwait-based company Al Khair.

‘Omantel wishes to announce that it has signed on Sunday a non-binding letter of intent with Al Khair with respect to the purchase of all of its shares and the shares of its subsidiaries/affiliates in the share capital of Zain Group and that amounts to 12 per cent of the total share capital of the company’, Omantel said in a disclosure filed with the Muscat Securities Market (MSM) on Monday.

It said Al Khair is currently studying and evaluating the offer from Omantel and its legal and financial advisors.

In August, Omantel had acquired 425.7mn treasury shares of Zain Group, representing 9.84 per cent of Zain Group’s fully paid in and issued share capital at an offer price of KWD0.6 per share, representing a total cash consideration of RO325.6mn.

Omantel shares rose 1.82 per cent on Monday at the MSM.

‘With the proposed purchase of additional 12 per cent stake, Omantel stake in Zain Group would increase to nearly 22 per cent levels. Assuming similar price of last transaction (KWD0.6 per share), the proposed acquisition would cost around US$1bn for Omantel’, Gulf Baader Capital Markets (GBCM) said in a research note.

GBCM said that the CEO of Omantel is already in the board of Zain Group and the level of stake increase and further board entry would mean Omantel could classify this investment as an associate post this transaction. ‘We remain positive on this investment in an established player in the GCC region with presence across several markets’, GBCM added.

With regards to its earlier acquisition of 9.84 per cent stake in Zain Group, Omantel in August said that the transaction was in line with its corporate strategy Omantel 3.0, launched in 2015 to diversify investment and position the business as a leading digital service provider in the region by 2020.

The biggest shareholder in Zain Group is Kuwait Investment Authority with a stake of 24.6 per cent, followed by Al Khair National Company with 12.2 per cent stake, according to the information on Zain Group’s website. Omantel is currently listed as the third biggest shareholder of Zain Group, the data on Zain Group’s website showed.