Oman Telecommunications Company (Omantel) has agreed to acquire a minority stake in Kuwait’s Zain group for OMR325.6 million.

Omantel, the Sultanate’s biggest telecommunications service provider, has signed a share purchase agreement with Kuwaiti Mobile Telecommunications Company (popularly known as Zain group) for purchasing 425.7 million treasury shares or a 9.84 per cent stake in the firm, which is subject to regulatory approvals. Omantel will offer 0.60 Kuwaiti dinar per Zain share in cash transaction.
A Reuters report said the purchase was announced days before Oman is to shortlist qualified applications for a third mobile licence for which Zain had offered to bid. A shortlist of qualified applications will be announced on August 14, with the winning bid to be announced on September 4, Zain said in a disclosure statement in May.
Omantel has been looking for growth opportunities outside the country as the domestic market is getting saturated.
Zain shares gained 4.4 per cent to climb to 0.471 dinar in heavy trading on the Kuwait Stock Exchange on Thursday. However, Omantel shares remained flat at OMR1.120 on Thursday.
Acquiring a minority stake in Zain is a deliberate investment for Omantel as the company is positioning itself as a leading digital service provider, said a company statement.
“This is in line with our Corporate Strategy 3.0, launched in 2015. We have always emphasised that growth will come from continued diversification, and this acquisition positions Omantel for the future,” said Martial Caratti, chief financial officer of Omantel.
The acquisition will also help Omantel to position itself as a leading digital service provider.
Omantel will explore ways to cooperate in several key areas, including the wholesale telecom business, operations and networks, commercial activities, and knowledge and experience sharing. It will also allow Omantel to gain exposure to nine growth markets with a total population of 175 million, and provide significant growth drivers across a range of services and applications.
Besides, the acquisition will improve diversifying sources of income and profitability, leading to enhanced shareholder value. Omantel will explore options for cost synergies through operational cooperation and capital expenditure.
Zain is a high performing and innovative telecommunication group with a complementary geographical footprint. It is the most advanced digital service provider in the Middle East and North Africa (MENA) region with strong partnerships with leading technology players across the globe. It has a fast growing and lucrative portfolio of diversified services, which include data monetisation, enterprise, fixed broadband services and smart city initiatives, added the company release.
Credit Suisse is acting as the exclusive financial adviser and Freshfields Bruckhaus Deringer LLP is acting as the legal adviser to Omantel.