And so it ends
Etisalat walks away from its $12 billion bid to buy a majority stake in Kuwaiti telco Zain, but how will this affect it and the region? Kipp explores.
March 20, 2011 4:03 by Eva Fernandes
Early on Saturday, Etisalat released a statement saying that it had ended talks with Zain on account of the results of its due diligence process, a lack of unanimity among Zain board members and political unrest in the region. And though we joke about the uncertainty of the deal, many analysts are shocked with the announcement, because things seemed to be on track, for a change.
For instance Bahrain’s Batelco and Saudi Arabia’s Kingdom Holding bid to take over Zain’s Saudi unit were really progressing (in fact the two have expressed interest even in the light of Etisalat pulling out). If Etisalat had been successful in its bid, it would have the majority vote about the telco’s operations in Kuwait, Iraq, Bahrain, Jordan, Lebanon and Saudi Arabia. But after, what The National calls “a saga filled with lawsuits, shareholder disputes and new laws covering takeovers of Kuwaiti companies” Etisalat pulled out of the deal.
So what does this mean for Etisalat? Well some see the move as a real blow to Etisalat’s revenues, in light of its rather paltry Q4 results. Matthew Reed, a Dubai-based analyst at Informa Telecoms & Media told the AP “This is quite a disappointment for Etisalat. One of the key planks of their strategy is to try to increase their international revenues (…)If Etisalat had got Zain, that would have represented a big boost to its regional and international portfolio.”