Telecom leader Omantel proposes to finance its acquisition of a minority stake in Kuwait’s Zain group through a bridge loan facility. This would subsequently be taken out through a long term loan or capital market instrument, the company said in a filing on the Muscat Securities Market (MSM) on Wednesday.
Omantel had on August 10 announced that it had signed a share purchase agreement with Kuwait based Mobile Telecommunication Company of Zain Group for the acquiring 425.7 million treasury shares which form 9.84 per cent stake for 325.6 million rials.
As per regulations of the Kuwait bourse, the public auction of the treasury shares will take place on August 24. If successful in the auction, Omantel will own 9.84 per cent stake in Zain Group, the filing said.
Acquiring a minority stake in Zain is a deliberate investment for Omantel to position itself as a leading digital service provider. This is in line with Omantel’s corporate strategy, aiming for growth and diversification, the statement said.
Both the international agencies Moody’s Investors Services and Standards and Poor have confirmed Omantel’s current ratings post announcement with Moody’s qualifying further the transaction as credit positive, the company said.
Omantel will explore ways to cooperate in several key areas including the wholesale telecom business, operations and networks, commercial activities, and knowledge and experience sharing. It will also allow the firm to gain exposure to nine markets with a total population of 175 million and provide significant growth drivers across a range of services and applications.
Income diversification and enhanced shareholder value. The acquisition is expected to improve profitability, leading to enhanced shareholder value. Omantel will explore options for cost synergies through operational cooperation and capital expenditure.
Zain is a high performing and innovative telecom business with a complementary geographical footprint. It is the most advanced digital service provider in the Mena region with strong partnerships with leading technology players across the globe. It has a fast growing and lucrative portfolio of diversified services which includes data monetisation, Enterprise (B2B), fixed broadband/ FTTH services and smart city initiatives, the company notes.