The Kuwaiti telecommunications operator Zain says it is confident of overcoming legal challenges raised in Nigeria to the proposed US$10.7 billion (Dh39.3bn) sale of its African assets.
Zain confident it will be able to sell African assets
The Kuwaiti telecommunications operator Zain says it is confident of overcoming legal challenges raised in Nigeria to the proposed US$10.7 billion (Dh39.3bn) sale of its African assets. Two minority shareholders of Zain Nigeria - Econet Wireless Holdings, a South African telecommunications company that holds 5 per cent of Zain Nigeria, and Broad Communications, which holds a 14 per cent stake in the unit - have filed law suits challenging Zain's 65 per cent ownership in Zain Nigeria.
The legal obstacles could block Zain's proposed sale of its African assets, excluding those in Sudan and Morocco, to India's Bharti Airtel. Bharti is India's largest mobile-telecoms company by subscribers and has been looking to expand in Africa, including making two earlier attempts at purchasing MTN Group, based in South Africa. It is in exclusive talks with Zain until March 25 to make the purchase.
Yesterday, Nabil bin Salama, the chief executive of Zain, said he believed his company would overcome the legal challenges. "We are in a good position and we don't see a problem," he said. The sale, if it goes ahead, will be one of the largest cross-border deals in the Middle East and a turning point in Zain's ongoing disposal plan. Zain has more than 40 million subscribers in Africa, about 62 per cent of its client base. More than half of its $7.4bn of annual sales in 2008 came from Africa, but that market accounts for only about one third of its net earnings.
Analysts said the sale would help Zain concentrate on improving the value of its Middle Eastern assets, including its Saudi Arabian unit, which is in discussions with creditors after it failed to meet payments connected with a $2.5bn loan. The controversy between the shareholders dates back to 2006, when Celtel, now called Zain, purchased a majority stake in a group called Vee Networks, now Zain Nigeria.
Econet Wireless was a founding shareholder of Vee Networks and claimed that its right of first refusal over the stake was breached in 2006, when its Nigerian partners sold their shares to Zain. The South African firm has appealed to legal authorities, including an international tribunal operating under the auspices of the UN, for resolution of the dispute. * with agencies email@example.com