Zain Group expects solid 2010 results

Zain CEO's comments fuel speculation about value of the company as Etisalat plans to acquire 46% stake.

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Zain Group expects solid 2010 results Nabeel bin Salama, CEO, Zain Group, is optimistic about the company's 2010 results.
By  Roger Field Published  January 3, 2011

Kuwait's Zain Group expects to see revenues and profits rise by more than 50% for 2010, according to a report from Kuwaiti daily newspaper, Al-Seyassah, which cited the telco's CEO, Nabeel bin Salama.

Salama attributed the strong growth to Zain's performance in eight of the countries it operates in, according to the report.

In 2009, Zain suffered a 39% drop in profits as it battled against a struggling global economy, combined with a sluggish performance from its African unit, most of which has since been sold to Bharti Airtel.

Zain, which is currently subject of a takeover bid by UAE telco Etisalat, reported a net income for 2009 of KWD 195 million ($675 million), a drop of 39% compared with 2008's figure of $1.2 billion.

Emmanuel Durou, a partner at Value Partners, a Dubai-based telecoms consultancy, said that Salama's comments could provide Zain shareholders opposed to sale of a 46% stake in the company to Etisalat with a "platform to delay the deal based on a sub-par valuation of the company".

However he added that the price per share offered by Etisalat "has most likely been amended" as a result of the due diligence carried out by the UAE telco in recent weeks.

"The announcement comes conveniently as Etisalat's due diligence process draws to an end, which tactically put additional pressure on Etisalat's bid price," Durou added.

"The public disclosure of Zain's 2010 results, ahead of the formal release, essentially formalises the numbers disclosed to Etisalat and puts a stick in the ground for the value of the company."

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