Abu Dhabi-listed Etisalat Group said on Sunday that it was selling its 92.3 per cent stake in the Sudanese fixed-line operator Canar to Kuwait's Zain for Dh349.6 million.
The deal will strengthen Zain Sudan’s operations in the African nation, where it has a 42 per cent market share.
Etisalat bought a stake in Canar in 2004 and more than doubled its stake in the Sudanese telco in 2007, paying Dh584m in the process.
“For quite a long time, Etisalat tried to get a mobile licence for Canar but it was unable to do so – and without a mobile licence, Canar is not of long-term strategic value to Etisalat,” said Matthew Reed, the practice leader Middle East and Africa at consultants Ovum, based in Dubai.
“But for Zain, acquiring Canar makes sense because Canar has quite an extensive fixed infrastructure in Sudan, which will complement Zain’s existing operation in Sudan.”
Zain is the largest mobile operator in Sudan in terms of subscriptions, with 11.9 million mobile subscriptions in the country at end of last year.
The other two mobile operators in Sudan are MTN, with 8.46 million mobile subscriptions by the end of last year, and Sudatel, with 2.59 million mobile subscriptions at the same time.
Other analysts said that the devaluation of the Sudanese currency was among the reasons behind the Canar sale.
“The macroeconomic issues in Sudan and currency weakness are also making the operations challenging for Etisalat,” said Nishit Lakhotia, the head of research at Securities and Investment Company in Bahrain.
In 2012, because of currency fluctuations and the challenging political and economic circumstances in Sudan, Etisalat took an impairment of Dh459m.
“I think the [sale] price of Dh350m is not very different from the carrying value of Canar Telecom on Etisalat’s book as at the end of the 2015 financial year,” said Mr Lakhotia. “There may be a small gain being booked by Etisalat on exit, but nothing significant.”
Last week, Etisalat said that first-quarter net profit across the group fell by 8 per cent to Dh2 billion, compared with Dh2.17bn last year.
selgazzar@thenational.ae
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