x Abu Dhabi, UAEWednesday 26 July 2017

Zain management fights to retain board

Appeal against a decision by a lower court to annul Zain's board comes amid a 'power vacuum' at the Kuwait telecoms company.

The top management of the Kuwaiti telecommunications company Zain has appealed against a ruling by a lower court to annul the board and revoke its decisions.

A Kuwaiti court last month declared Zain's board illegitimate, contributing to what one analyst describes as a "power vacuum" at the firm.

In a statement to the Kuwait Stock Exchange, Zain said five of its board members had appealed against the decision.

Asaad Al Banwan, the chairman, filed one appeal, while board members Bader Al Kharafi, Shaikha Al Bahar, Abdul Aziz Al Nafisi and Jamal Al Kathimi filed another, the company said.

Zain said that a court was set to look into the appeal on October 26.

The move follows the failure of two major transactions concerning Zain.

A US$12 billion (Dh44.08bn) bid for the company by the UAE's Etisalat failed in March.

Disputes among Zain board members and regional unrest were cited as reasons for the breakdown of the deal. Calls for a sale in Zain were led by the Kharafi Group, a major shareholder in the firm. However, some other shareholders opposed the Etisalat deal.

Last month negotiations for a separate sale of Zain's 25 per cent in Zain Saudi Arabia were also abandoned.

Zain had been looking to sell its stake in the Saudi Arabian unit for $950 million.

Kingdom Holding, an investment company run by the Saudi billionaire Prince Al Waleed bin Talal, and the Bahraini telecoms firm Batelco were lined up to buy the stake.

Matthew Reed, a senior analyst for the Middle East and Africa at Informa Telecoms & Media, said the situation at Zain "doesn't seem entirely healthy" in light of the decision to annul the board.

"That's not great for Zain because of this power vacuum at the top," said Mr Reed.

"This has been a problem for some time - conflicting problems from several shareholders."

A spokesman for Zain declined to comment on the implications of the decision.

"Management doesn't comment on activities between shareholders and board members.

"Our mandate is to run the business efficiently and increase stakeholder wealth," the spokesman said.

Shares in Zain, which are traded on the Kuwait Stock Exchange, closed down 1.06 per cent yesterday at 0.930 Kuwaiti dinars.

 

bflanagan@thenational.ae