Sep 01 2009 |
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Zain Abolishes Cap Rule on Individual Ownership
DUBAI -- Zain , Kuwait's largest telecom operator, removed a long-standing cap on individual ownership stakes in an effort to attract more investment, a step that could lead to foreigners buying a controlling share in one of the nation's best-known companies.Zain shareholders agreed at a meeting on Monday to abolish articles in the company's statutes that barred individual investors, foreigners and Kuwaitis alike, from owning more than 5 per cent of the business, Zain executives said.
"The amendment would open the door for foreign investors to own a majority stake in the company," Zain Chief Executive Saad Al Barrak told reporters in Kuwait City. "We made the change today (Monday) to encourage people to buy more shares into Zain . We are opening up in line with globalisation."
The decision came on the heel of reports that several foreign telecom operators have held talks with Zain 's major Kuwaiti shareholders about buying a majority stake in the company, which serves more than 65 million customers in 24 countries. UAE-based etisalat said in July that it would be interested in taking a 51 per cent stake in Zain for the right price but clarified that it had not made a formal offer.
France's Vivendi SA, owner of phone companies SFR and Maroc Telecom , said in July that it had broken off talks with Zain about buying a majority stake in the Kuwaiti company's African operations. Zain values its African assets at about $10 billion, people familiar with Vivendi's discussions said in June. Al Barrak declined to confirm that figure when asked about it after the shareholder meeting.
A Kuwaiti newspaper quoted Al Barrak in August as saying that Zain was in talks about its African business with three major telecoms firms, including one from India. Asked if this report was true, he said: "I think that's correct to a far degree." However, he declined to identify any of these firms. Banking sources told Reuters earlier this month that India's Reliance Communications has begun talks with Zain about its operations in Africa.
Zain has suffered in the global economic meltdown and decided in May to cut 2,000 jobs, or 13 per cent of its workforce, in a bid to improve its operating margin by five per cent.
By Abdul Basit
© Khaleej Times 2009
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