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Thursday September 10, 2009

Syed Mokhtar in Kuwait telco foray

He and India-based Vavasi are buying majority stake in Zain

PETALING JAYA: Low-profile tycoon Tan Sri Syed Mokhtar Al-Bukhary and India-based Vavasi Group are buying a majority stake in Zain, Kuwait’s biggest telecommunication company.

A Bloomberg report, quoting Vavasi Telegence Pvt managing director Farid Arifuddin, yesterday said the transaction agreement was signed on Monday, finalising “the modalities of the transaction structure.”

Two other Indian companies – Bharat Sanchar Nigam and Mahanagar Telephone Nigam – were invited to participate in the acquisition but have yet to come on board.

A Reuters report, meanwhile, said the sale involved combined stakes of 46%, owned by majority shareholder Kharafi Group (20%) and several minority shareholders. The sale price is estimated at two dinar per share, valuing the entire deal at US$13.7bil.

The reports, however, did not disclose Syed Mokhtar’s portion in the deal.

Zain has a paid-up capital of US$1.49bil representing 4.275 billion shares, and its biggest shareholder is the Kuwaiti government with 24.6%.

It was reported earlier that Zain, which is present in 24 countries, planned to dispose of stakes in its African operations, with the exception of its Morrocan and Sudanese business.

For the financial year ended Dec 31, 2008, it made a net income of US$1.2bil on revenue of US$7.4bil, serving over 63.5 million customers in the Middle East and Africa.

This is the first telecom venture that Syed Mokhtar is involved in. His flagship companies, including 52%-owned MMC Corp Bhd, 56%-held DRB-HICOM Bhd and 30%-owned Tradewinds (M) Bhd, are involved in diverse sectors like transport, logistics, energy, utilities and engineering, construction, automotive and agriculture.

A local brokerage head of research said there was still much room for growth for the telecom sector in the Middle East compared with the domestic market.

“The Malaysian market is already saturated. The Middle East, meanwhile, still offers opportunities as income is expected to improve with oil prices bouncing back,” he said.

The local telecom industry is crowded by three main network operators – Maxis, Celcom and DiGi – alongside several smaller niche segment players like U-Mobile (M) Sdn Bhd and Packet One Networks (M) Sdn Bhd.

The head of research added that the Malaysian tycoon was familiar with the Middle Eastern markets due to his business exposure.

His private vehicle, SKS Ventures Sdn Bhd, is involved in several projects including developing oil reserves at Ferdos, building a power plant in Zanjan and constructing a refinery in Shiraz, all in Iran.

MMC, meanwhile, is also involved in the development of the US$30bil Jazan Economic City in Saudi Arabia.

Another head of research shared similar views, adding that “the sector is not as important as the people he’s familiar with in the Middle East.”

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