Omantel agrees to acquire minority stake in Kuwait’s Zain for OMR326m

Oman Telecommunications Company (Omantel) has agreed to acquire a minority stake in Kuwait’s Zain group for OMR325.6 million, according to a disclosure statement posted on MSM website.

Omantel, the Sultanate’s biggest telecommunications service provider, has signed a share purchase agreement with Kuwaiti Mobile Telecommunications Company (popularly known as Zain) for purchasing 425.7 million treasury shares or 9.84 per cent stake of the latter, which is subject to regulatory approval in Kuwait. Omantel will offer 0.60 Kuwaiti dinar per Zain share in cash transaction.

Omantel has been looking for growth opportunities outside the country as the domestic market is getting saturated.

“The transaction is in line with Omantel’s corporate strategy (Omantel 3.0), which was launched in 2015 to diversify investment and position the business as a leading digital service provider in the region by 2020,” the disclosure statement added.

Acquiring a minority stake in Zain is a deliberate investment for Omantel as we position ourselves as a leading digital service provider, said a company statement

“This is in line with our Corporate Strategy 3.0, launched in 2015. We have always emphasised that growth will come from continued diversification, and this acquisition positions Omantel for the future,” said Martial Caratti, chief financial officer of Omantel.

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

Besides, the acquisition will improve profitability, leading to enhanced shareholder value. Omantel will explore options for cost synergies through operational cooperation and capital expenditure

Zain is a high performing and innovative telecommunication group with a complementary geographical footprint. It is the most advanced digital service provider in the Middle East and North Africa (Mena) region with strong partnerships with leading technology players across the globe. It has a fast growing and lucrative portfolio of diversified services which includes data monetisation, enterprise, fixed broadband services and smart city initiatives, added the company release.

Credit Suisse is acting as exclusive financial adviser and Freshfields Bruckhaus Deringer LLP is acting as legal adviser to Omantel.