KUWAIT – As Qatar Telecom (Qtel) dangles a $2.2 billion bait to persuade minority shareholders in its Kuwaiti unit Wataniya to sell out, it knows one major investor is positioned to frustrate its goal of 100 percent control. The Kuwait Investment Authority (KIA), the sovereign wealth fund whose 23.5 percent stake in Wataniya makes it the second biggest shareholder, puts it in prime position to decide the fate of Qtel's offer for the 47.5 percent it does not already own. Qtel bought its controlling stake in 2007 but has now decided to seek full control, capitalizing on Wataniya's weak share price and completing the takeover of a company with attractive growth prospects in emerging markets such as Algeria and Tunisia. Qtel's 2.6 dinars per share offer isn't contingent on the KIA's acceptance, but its decision may weigh heavily on other minority shareholders. Equally the KIA must figure out if it's happy being left with a holding in a company with an increasingly dominant major shareholder or would be better off bailing out. Its decision may have further ramifications, offering insight into its strategy for a telecoms portfolio which also includes part of two other Kuwaiti telecom firms, Zain and unlisted Viva. "The KIA is not desperate to earn a slight premium and cash out. They are long-term investors and this is a national asset. It will be interesting to see what stand they take," a banker to the telecoms sector said, declining to be named as he is not authorized to talk to media. – Reuters
