Zain's African arm 'put up for sale'
Kuwaiti newspaper Al Qabas said Zain's African arm — which traded as Celtel before a grand rebranding exercise last year — may be sold for US$12bn to a French company.
MTC was waiting to hear from the potential buyer but would study bids from other companies if the deal fell through, the paper said, citing sources close to the deal.
The unnamed French company would also buy the African operation's debts, which would be discounted from the fee. Those debts were not quantified.
Mixed signals make it difficult to assess how plausible the speculation is, and Zain would not comment yesterday, 9 June 2009.
MTC paid $3,4bn for Celtel in 2005, outbidding MTN. But if it now wants to jettison its African operations, its timing is odd, as MTN would be excluded from making a fresh bid. MTN is negotiating a tie-up with Bharti in India, and the two have agreed to talk exclusively to each other until 31 July. Yet if Zain Africa is on the market, MTN would be an obvious suitor, as would its rival Vodacom.
Zain operates in 23 countries in the Middle East and Africa, serving 64,7-million customers. The African operations it is reportedly trying to shed covers 16 countries and 65% of the group's customers. However, they are not doing as well financially as its owners would like. Africa contributed only 10% of the profit in financial 2008 and in the first quarter to March its African arm suffered a net loss of $4,9m on a revenue of $917m.
Yet MTC's CEO Saad Al Barrak has not hinted at any plans to sell. Despite challenges posed by the global economic crisis and competitive markets, the first-quarter results were testimony to sound management practices, he said, and “a reflection of our unwavering commitment to reach our 2011 target of being a top-10 global mobile operator”.
Shedding a major chunk of its business would make that goal impossible, and since Al Barrak made that statement only a month ago, rumours of the sale may simply be untrue.
In November, Zain Africa CEO Chris Gabriel said the company planned to be the acquisitor rather than the acquisition in an inevitable consolidation of telecoms players. He predicted that Africa's 100-plus operators would eventually consolidate until a maximum of five survived.
Zain's commitment to Africa saw it launch a network in Ghana in December, and it plans to introduce financial services via cellphones in several countries this year.
If a sell-off is under discussion, the French suitor could be Orange, the cellular offshoot of France Telecom.
Orange is already active in 16 African countries, including Botswana, Madagascar, Kenya, Senegal and Uganda, and seems keen to expand its footprint.
Last month Orange launched a pan-African advertising campaign to strengthen its brand, and in November it committed to supporting the roll-out of a submarine fibre-optic cable. The project would eventually link more than 20 West African countries to Europe.
The 12000km ACE cable (Africa Coast to Europe), will begin in France and could end in SA.
Source: Business Day
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