JEDDAH/DUBAI: Etisalat, the region's biggest telecom provider by market value, said Saturday it has scrapped a near $12 billion plan to buy 46 percent of Kuwait's Mobile Telecommunications Co. (Zain), a deal that would have given it access to new markets in the region such as Iraq, Kuwait and Morocco. However, Bahrain Telecommunications (Batelco) will proceed with its joint $950 million cash bid for a stake in Zain's Saudi unit despite the end of the Kuwaiti firm's $12 billion deal with Etisalat, Batelco's chief executive said Saturday. “We were not buying Zain, we were buying a stake in Zain KSA and we are still interested in that,” Batelco CEO Peter Kaliaropoulos told Reuters from Riyadh. “Now the question is will Zain still sell it. But we will proceed.” Batelco teamed up with Saudi billionaire Prince Alwaleed bin Talal's Kingdom Holding to bid for Zain's 25 percent stake in Zain Saudi Arabia. Etisalat said in a statement Saturday that “due to the results of due diligence done by Etisalat's financial advisers and legal experts, the political turmoil in the region, the absence of a consensus between Zain's shareholders, and the effect of the law binding offers that is due to be issued in Kuwait...Etisalat conditions that were announced on Nov.3 are no longer applicable.” Key Zain shareholder, Al Khair National Co. for Stocks and Real Estate – which is controlled by Kuwait's Kharafi Group - was leading discussions with Etisalat on its bid for Zain. Etisalat launched its original bid for Zain, worth about $11.7 billion, in September last year. It missed its first self-imposed Jan. 15 due diligence deadline because of what it said at the time was a “lack of information.” Its second due diligence deadline expired at the end of February. Etisalat's pursuit of Zain has been plagued by setbacks and problems ever since it launched its original offer. One major stumbling block was Zain's 25 percent share in its Saudi operations. As it stands, both Zain and Etisalat operate in the Saudi market, an issue that analysts said might have concerned the local regulator there and blocked a possible deal. The Zain Sadui issue then appeared to have been sorted last week after Zain said Saudi's Kingdom Holding Co. and Bahrain's Batelco Group had agreed on the terms to buy its 25 percent stake. “The collapse of Etisalat's acquisition talks with Zain represents a reversal for the UAE group, which is keen to increase its international revenues because its revenues in its home market are flat or declining,” said Matthew Reed, a senior analyst at Informa Telecoms and Media in Dubai. Etisalat is now left with few regional opportunities after falling to secure the Zain stake, Reed said. “The successful completion of the Zain deal would have given Etisalat control of a number of market-leading mobile operations in the Middle East, and positioned them as the leading pan-regional mobile operator in the region. Now, Etisalat's international investments team will most likely focus its efforts on the remaining, smaller, opportunities in the region, such as Syria's third mobile license and Iraq's fourth mobile license,” he added.
