Zain to focus on Middle East growth

Kuwaiti operator plans to invest more heavily in Middle East as it finalises sale of African assets to Bharti Airtel.

Tags: KuwaitMergers and acquisitionsZain - Kuwait
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Zain to focus on Middle East growth Zain Group plans to shift its focus to growth potential in the Middle East. (Getty Images)
By  Roger Field Published  February 24, 2010

Zain plans to increase its focus on extracting growth from its Middle East operations, and is interested in a long term license agreement in Lebanon and other potential opportunities for expansion in the region, Nabil bin Salama, the company's CEO, said in an emailed statement to Zawya Dow Jones.

Salama added that Zain intends generate further growth from its operations in Saudi Arabia, Iraq and Sudan. In the statement, Salama added that Zain "is also interested in any other opportunities to expand if it gives good returns and conforms with the group's strategy for the new phase."

Last week, Zain confirmed that it had accepted an offer from Bharti Airtel for the sale of its African assets, excluding Morocco and Sudan.

The company said it expected to make a return of some $5 billion from the deal, which will see Bharti Airtel pay $10 billion on completion of the deal, followed by $700 million one year after signing the agreement, according to a statement from Zain.

Lindsey McDonald, a consultant for the MENA region with Frost & Sullivan's ICT practice, said that the sale of the African assets indicated a "sea change in strategy for the operator" and an increased focus on core assets.

"While there is a lot of potential in the African market, it is an expensive region in which to deploy assets. Given the force of the global downturn, it is likely that this has had a role to play in Zain's decision to sell.

McDonald added that the sale could present Zain with "a unique opportunity" for the operator to focus on its core markets which are known to be very lucrative, with high-growth potential. "Opportunities to gain greater hold of the telecoms value chain could be an area of interest to Zain in an attempt to move beyond being seen as a simple mobile operator," she said. "While there are clearly challenging times ahead for the new management of the operator, this is certainly a chance for it to emerge as a much stronger organisation."

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