Dubai: Kuwait's Mobile Telecommunications Company (Zain), is likely to struggle to grow revenues after deciding to offload most of its Africa assets, quashing previous aspirations of becoming a top-ten global player by the end of 2011, analysts said.
Zain, the third-largest Arab telecom company by market value, on Monday said it had entered into exclusive talks with India's Bharti Airtel to sell assets in 15 African countries, excluding Sudan and Morocco, in a deal valued at $10.7 billion (Dh39.3 billion).
The transaction, which is subject to regulatory approval and due diligence by Bharti, would be one of the biggest asset sales by a Gulf company and the largest by a Gulf telecom operator.
Zain said on Tuesday that it expects net proceeds of up to $5 billion from the deal. Money from the sale, if realised, would be included in the company's second quarter earnings.
The Africa asset disposal could, however, consign Zain to life as a regional mobile company operating in just two African countries and six Middle Eastern states.
"Because of the maturity of the Middle East operations, and strong competition in Zain's home market of Kuwait, we expect revenue growth to ease," said Irfan Ellam, an analyst at Dubai-based Al Mal Capital.
The resignation of chief executive officer Sa'ad Al Barrak earlier this month opened the way to the Africa exit, ending nearly a year-long shareholder-management feud over the future of the company, analysts said.
Kuwait's Kharafi Group was seen as the main catalyst behind the Africa asset sale after an attempt to sell a controlling 46 per cent stake in Zain to an Indian-Malaysian consortium for about $13.7 billion stalled. The process wasn't backed by Al Barrak, analysts said.
