Zain mulling $10bn sale of Africa unit - sources

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ZAIN SALE: African division may be offloaded after review has been carried out, say sources. (Getty Images)

Zain, Kuwait’s biggest telephone company, has asked Swiss bank UBS to consider a possible sale of its African division, sources said on Tuesday.

News agency Bloomberg reported that Zain, which values the unit at $10 billion, has yet to decide its fate, although any sale would exclude its Sudanese operations, sources said.

Zain is running a ''strategic review to enhance shareholder value,'' spokesman Ibrahim Adel said in a telephone interview with Bloomberg Tuesday. ''We have an ongoing relationship with UBS, and at all times they assist us in exercises.'' He declined to comment on a possible sale of the division.

France’s Vivendi SA has approached Zain in recent months about exploring a purchase of the African division, the sources said.

Given slowing demand in more mature markets such as North America and Europe, Africa is seen as a growth opportunity.

''Global players are moving into Africa as it is seen as one of the largest untapped markets,'' Brian Neilson, head of research for Johannesburg-based telecommunications consultant BMI-TechKnowledge, told the agency in a telephone interview.

''There are still probably 300 million unsigned subscribers in Africa. Half the market still lies ahead.''

Vivendi, which owns 53 percent of Maroc Telecom, has previously indicated it’s to expand the division in emerging markets. Agnes Vetillart, a spokeswoman for Vivendi in Paris, declined to comment on the latest developments.

Earlier this month Kuwaiti Arabic daily Al Qabas reported that Zain was seeking to close a $12 billion deal to sell its unit to an unnamed French firm.

It was understood that the French company would also assume all of the division’s debts.

Formerly known as MTC, Zain has grown into a global player with operations in more than 23 countries.

According to CEO Saad Al Barrak, the firm has ringfenced $5 billion to spend on new acquisitions before 2011 and is on track to hit this year's target of a 30 percent rise in net profit. Group net profit was $1.40 billion in 2008; an annual increase of six percent.

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