Omantel to seek bridge loan to finance Zain acquisition

MUSCAT: Oman Telecommunications Company (Omantel) plans to finance its acquisition of a minority stake in Kuwait’s Zain group with a bridge loan facility, which will subsequently be taken out through a long term loan or capital market instrument.

Earlier this month, Omantel said it had signed a share purchase agreement with Mobile Telecommunication Company (Zain group) to acquire 425.7 million treasury shares (9.84 per cent stake) for OMR325.6 million.

In accordance with the regulations of the Kuwait bourse, the public auction of the treasury shares will take place on August 24, said a disclosure statement posted on the Muscat Securities Market (MSM) website on Wednesday. “If successful in the auction, Omantel will own 9.84 per cent shares in the Zain group,” added the disclosure statement.

Acquiring a minority stake in Zain is a deliberate investment for Omantel to position itself as a leading digital service provider.

Both Moody’s Investors Services and S&P have confirmed Omantel’s current ratings post the announcement with Moody’s further qualifying the transaction as credit positive.

The acquisition will position Omantel as a leading digital service provider. The acquisition is also part of Omantel’s Corporate Strategy 3.0 and is in line with the strategic objective of diversifying exposure and positioning the business for future growth.

Also, it will provide an opportunity to cooperate across core business functions. Omantel will explore ways to cooperate in several key areas, including the wholesale telecom business, operations and networks, commercial activities, and knowledge and experience sharing.

Further, the acquisition will also allow Omantel to gain exposure to nine markets, with a total population of 175 million, and provide significant growth drivers across a range of services and applications.

Another major advantage of this acquisition is income diversification and enhanced shareholder value. The acquisition is expected to improve profitability, leading to enhanced shareholder value. Omantel will explore options for cost synergies through operational cooperation and capital expenditure.

Besides, the acquisition will leverage Zain’s global scale and international expansion. Zain is a high performing and innovative telecom business with a complementary geographical footprint.