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| BSNL, MTNL offered majority in Zain SPV |
| Mansi Taneja / New Delhi Oct 07, 2009, 00:40 IST |
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Vavasi also in talks with Kuwait govt for participation.
The race for control of Kuwait-headquartered Zain Telecom has quickened with the Indian consortium led by Delhi-based Vavasi group saying it is willing to give a majority stake in the consortium to state-owned Bharat Sanchar Nigam Ltd (BSNL) or Mahanagar Telephone Nigam Ltd (MTNL), depending on which company gets government approval to go ahead with the deal.
The Vavasi group has an agreement with the Kharafi family of Kuwait to pick up its 46 per cent stake in Zain Telecom.
BSNL Chairman Kuldip Goyal, who confirmed to reporters in Geneva yesterday that it had given Vavasi a letter expressing interest in joining the consortium, said the telecom company would like to have more than 50 per cent with management control of the special purpose vehicle (SPV) that will be set up to bid for Zain. This effectively means the telecom utility will control 23 per cent of Zain’s equity.
The proposal has the support of the Department of Telecommunications and Communications Minister A Raja has said it is well within the scope of the PSUs to go for such bids.
A top executive of the Vavasi group said the company was floating an SPV in which half the equity will be held by four partners — Vavasi, two private equity funds and Malaysian billionaire Syed Mokhtar Al Bukhary. The rest of the equity will be held by a telecom company.
“If the telecom company wants more than 50 per cent stake and majority control we are willing to offer that so as long as it fits in with our strategic objectives,” the executive added.
The Vavasi group, he said, will initially pick up 10 per cent in the SPV and may increase it later.
The Kharafi family has also offered shareholders with 300,000 shares to join the consortium and according to Vavasi group executives they could get control of up to 50 per cent stake in Zain.
The government of Kuwait holds 25 per cent in Zain through the Kuwait Investment Authority (KIA) and has said it is willing to sell if the price is right. “We are in talks with KIA and will look at engaging with them as well,” the Vavasi executive said.
Merchant bankers say both Bharti, which recently failed in a bid to acquire a stake in South Africa’s MTN, and the Essar Group have explored options of buying Zain. Spokesmen from both groups declined to comment.
Zain Telecom is the new jewel in the crown in the African market with over 69 million customers and operations in 24 countries spreading across West Asia and Africa and with a market capitalisation of $19.5 billion.
With over 41 million customers in Africa alone (which include Uganda, Kenya, Tanzania, Republic of Congo and Chad, among others) it is the number one mobile operator in 12 of the 16 countries in the region. In West Asia, the main markets in which it operates are Saudi Arabia, Kuwait, Iraq, Bahrain and Jordan.
Also read: October 6: Acquisition talks for Zain Telecom begin
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