The largest shareholder in Zain, the Kuwaiti mobile operator recently listed as a possible acquisition target by Etisalat, is reportedly open to selling its 25 per cent share in the company. A report in Al Rai, a Kuwaiti daily newspaper, quoted anonymous sources in the Kuwait Investment Authority (KIA) as saying the sovereign wealth fund would consider such a sale at the right valuation. Last week the head of Etisalat's international investments unit said the company would consider purchasing a majority stake in Zain. Company spokesmen quickly said no such acquisition was yet in the works, and Etisalat soon released a statement from its chairman, Mohamed Omran, saying that no formal offer had been made. Zain has rapidly expanded its international presence in recent years, acquiring the pan-African operator, CelTel, in 2006, and entered Middle Eastern growth markets like Saudi Arabia and Iraq. The company has announced its intention to sell off its assets in sub-Saharan Africa, but it is its Middle Eastern footprint that Etisalat is interested in. Etisalat's acquisition of Zain, valued at over US$17 billion (Dh62bn), would be the largest ever cross-border deal in the GCC, but following Etisalat's comments, analysts expressed skepticism that such a deal could go ahead. Simon Simonian, a vice president of research at Shuaa Capital, said large regional operators like Saudi Telecom, Etisalat and Qatar's Qtel are unlikely to ever be sold, as they are considered strategic national assets. "In other countries you see governments monetising state assets, often to pay out debt," he said. "But in the GCC, that is not the case. Governments are not going to sell strategic assets. These companies are national champions and part of their international ambitions." But while companies like Etisalat, Saudi Telecom and Qatar's Qtel are widely seen as official national operators, Zain has sought to position itself as a firmly private-sector player, even relocating its corporate headquarters from Kuwait to Bahrain. Saad al-Barrak, the company's chairman, recently told an industry conference that he hopes to see the KIA sell its stake in Zain as soon as possible. "I wish they would leave tomorrow, and I am working on this," he said. But that may not be good news for Etisalat, majority-owned by the UAE government. While Mr al Barrak praised Etisalat's private-sector management style and international growth, he also stressed his long-held opposition to government involvement in the private sector. "Any government ownership imposes, by the nature of government, some economic and political decisions," he said, "which are extremely detrimental to the wellbeing of private enterprise."
tgara@thenational.ae
