Omantel announces trust in Bader Al-Kharafi on top of Zain pyramid for years to come
Strategic acquisition creates synergies between Zain and Omantel
KUWAIT: Oman Telecommunications (Omantel) will pay $1.35 billion to buy a further 12.1 percent stake in Kuwaiti telecoms company Zain in a deal that will expand its reach to nine Middle Eastern and North African countries. Omantel CEO Talal Al-Mamari announced Zain Vice Chairman and Group CEO Bader Al-Kharafi will continue leading the Kuwaitbased telecom, trusting his vision for the firm’s future expansion plans.
“We trust Bader Al-Kharafi and we rely on his leadership at Zain Group for several years to come, and we do not have plans to make any changes in the executive administration,” Mamari told CNBC Arabia. Mamari was speaking at the Kuwait Boursa after the auction of the Zain treasury shares, adding that Omantel will have five seats on the board of directors. “We are keen on strengthening the group’s operations, as we expect the deal to achieve integration opportunities of a value of $400 million over the next five years,” Mamari said.
Omantel paid 0.781 Kuwaiti dinars ($2.58) per share, around 74 percent above the current listed price, for the stake, which will take its total shareholding in Zain to 21.9 percent. That will make it the second largest shareholder after Kuwait’s sovereign wealth fund, the Kuwait Investment Authority. “The multiples paid by Omantel are equivalent or less than those paid for a similar transaction in the region,” Mamari was quoted by Reuters as saying. “This transaction will bring in scale. Prior to this transaction, Omantel was operating in a single market, namely Oman, and Zain Group operates in nine markets.”
Omantel purchased the stake from investment vehicles linked to Kuwait’s Al-Kharafi merchant family, following its acquisition of a 9.8 percent stake in Zain in August. The purchase is aimed at creating value for Omantel’s shareholders, diversifying its revenue sources and raising its regional scale, Omantel said in the bourse statement. The company has no immediate plans to raise its stake further and its priority is to accelerate the leveraging of the company’s debt, Mamari said.
Omantel financed the deal with a combination of long-term and bridge loan facilities, led by Citigroup and Credit Suisse, with HSBC, Standard Chartered, Bank Muscat and Arab Banking Corporation also participating. The syndication for the bridge loan was expected to be completed by the end of the year, said Mamari. That will be followed by a roadshow early next quarter to convert around $1.4 billion of the debt into a bond or sukuk, or a mix of both, with maturities of five and 10 years. The capital market instrument should be completed by the end of the first quarter next year, he said.