Kuwait's Zain should remain for sale following Etisalat's failed $12 billion take-over, but buyers will be wary, with nearby Bahrain under martial law and borrowing costs and risk both rising.
Any buyer will also miss telecoms operator Zain's $3.1 billion dividend payout, so would likely bid below Etisalat's 1.7 dinars-per-share offer for a 46 percent controlling stake, which the UAE firm withdrew on Saturday.
Zain shareholder, the Kharafi group, was the architect of the Etisalat deal, but rival shareholders were unhappy Kharafi would net all brokerage fees and exclude them from the sale. "Unlike a lot of telecoms companies, Zain has financial investors at the helm and they are likely to remain sellers," said a telecoms analyst who spoke on condition of anonymity.
In January, a Zain board member said Turkey's Cukurova Holding was in talks to buy a 29.9 percent stake in Zain, but no formal offer was made. Vivendi earlier eyed Zain's African assets and France Telecom is chasing growth in the Middle East and Africa. "Once regional markets stabilise, Kharafi could be a seller again and there are potential buyers - Zain has good assets and is the number one or two player in almost all markets in which it operates," said Irfan Ellam, Al Mal Capital telecoms analyst.
Zain, which operates in seven countries, will sign a preliminary contract to sell its quarter-stake in affiliate to Zain Saudi to joint bidders Kingdom Holding and Kingdom Holding , a Zain source said on Sunday. This had been a prerequisite for the Etisalat deal, but Zain said it would continue.
Zain and Etisalat had agreed terms in September, with Etisalat expecting to qualify for a record Zain 200-fils-per-share dividend, netting it $1.4 billion, according to Reuters calculations. This windfall will follow Zain's $9 billion African asset sale to India's Bharti Airtel last year.
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