Kuwait City: Kuwaiti mobile operator Zain will distribute a large portion of proceeds from a $9 billion (Dh33 billion) asset sale to shareholders, the company said yesterday, pushing possible purchases lower on the agenda.
In March, Zain struck a deal selling its operations in 15 African countries to India's Bharti Airtel but questions about what Zain would do with the windfall — either invest or pay out to shareholders — have persisted ever since.
"Regarding the surplus [returns from the sale], a big portion of it will be distributed to shareholders, in addition to our future investment operations," chairman Asa'ad Al Banwan told shareholders at the company's annual general meeting yesterday.
"If there are any investments in the near future in the Middle East... we will announce them at the time," he said.
Zain's shares closed up 3.1 per cent, bolstered by Bharti's comments on Wednesday that its $9 billion purchase of the Kuwait operator's African assets would be completed soon.
New investments
Zain expects to pocket up to $5 billion from the sale after paying down debt and says it is open to new investments in the Middle East.
Some analysts, however, say Zain would benefit more by reinvesting in existing operations, rather than seeking again to grow abroad.
Separately, shareholders approved the board's recommendation to distribute a cash dividend for 2009 of 170 fils per share, which excludes distribution from the sale of some of Zain's African units to Bharti. There are 1,000 fils to the dinar.
One key investor, the Kuwait Investment Authority (KIA), objected to the dividend, questioning whether Zain had enough cash on hand to pay it and saying it would harm shareholders' interests.
Banwan said the group may need short-term financing in order to meet the annual dividend payment.
"We have the ability to distribute 170 fils... we have cash in banks and we have financing," Banwan said.
In a statement after the AGM Zain said Bharti has begun drawing down funds to pay for the African assets.
