Shares in Zain fall by the most in three weeks after the Kuwaiti telco rejects offers for its unit in Saudi Arabia.
Zain cuts jobs as shares decline
Zain, the Kuwaiti telecommunications operator, last night announced a series of job cuts after its share price sank more than 7 per cent on worries that Etisalat's proposed US$11.7 billion (Dh42.97bn) acquisition of the company is hanging in the balance.
Several senior executives are among the 30 to 40 people who will be affected by the cuts.
On Saturday, Zain announced that three senior executives, including the chief operating officer, would leave the company.
The job cuts were announced yesterday after trading closed on the Kuwaiti bourse. Shares in Zain lost 7.25 per cent of their value - their steepest decline in eight months - sliding to 1.28 dinars.
The share price slide came after Zain rejected offers for its 25 per cent stake in Zain Saudi Arabia from Kingdom Holding, Bahrain Telecommunications and a consortium led by Al Riyadh Group.
Batelco said its offer to acquire the stake in Zain Saudi Arabia included a "significant amount of new cash", Bloomberg News reported. The Saudi billionaire Prince Alwaleed bin Talal bin Abdulaziz Al Saud, who runs Kingdom Holding, told Zawya Dow Jones the offer to buy Zain was reasonable for the shareholders of both companies.
The failure of the three bids casts doubt on Etisalat's proposed $11.7bn acquisition of a 46 per cent controlling stake in Zain. A sale of Zain's stake in the Saudi unit was a precondition of the Etisalat deal.
The decline in Zain's share price suggests "investors are not as confident as they were earlier that this Etisalat transaction will conclude soon", said Irfan Ellam, a telecoms analyst with Al Mal Capital.
Shares in Etisalat fell 0.91 per cent to Dh10.90 on the Abu Dhabi Securities Exchange, after a slight gain in early trading.
The Kharafi Group, one of the main shareholders in Zain, said it would not accept Etisalat extending its due diligence on Zain beyond the end of this month, Reuters reported.