Kuwait’s Zain hunts North Africa M&A

Telecommunications giant eyeing countries including Libya, Egypt and Morocco, CEO says
Kuwait’s Zain hunts North Africa M&A
Scott Gegenheimer - Group CEO.
By Daniel Shane
Wed 05 Mar 2014 10:39 AM

Kuwaiti telecommunications giant Zain Group is scouting out
acquisition opportunities in North Africa, its CEO told Arabian

The group, one of the largest telcos in the region with a
presence in eight countries, is looking for deals including management
contracts, as well as equity buys in companies in adjacent industries, Scott
Gegenheimer said.

“We are looking for acquisitions, both large mobile operators
and also in adjacent markets,” he said. “I think maybe over the next 18 months
to two years, you’ll see much more in the adjacent markets, looking at ISPs,
data centre providers, fibre plays and content. On the larger acquisitions we
want to stay in the MENA region. North Africa is interesting for us, but the
area that is challenging is valuations.”

Gegenheimer added that Zain does not have a price bracket
allocated for acquisitions, but that any buys have to be “realistic” in terms of

One territory in North Africa that Zain is actively targeting
is Morocco. The telco currently holds a sizeable shareholding in inwi, the
kingdom’s third largest mobile operator, and is keen to expand upon this. "We
think it's a very well run company, we'd love to increase our stake,"
Gegenheimer said.

Elsewhere in North Africa, Gegenheimer said that Zain would
also be interested in management contracts in Libya, after failing in a bidding
process for one with one of the country’s operators last year. “If they want to
do a management contract we’d be more than happy to move in and do it,” he

Egypt is could also be on Zain’s radar, although Gegenheimer
suggested that the market may be too mature, as it is already served by three
domestic operators.

“Egypt is a very interesting country. It’s a very large
population and strong ties to the MENA region. It’s interesting, but they’ve got
three strong players there, and they’re talking about a fourth licence there
with Egypt telecom, but it’s hard to say what will happen there in the future,”
he said.

Zain, which in its most recent financial quarter posted near
flat profit growth to KD51m ($180.6m), is also seeking to expand more into
adjacent services as a way of boosting earnings. Like many industry players
around the world, the company has been impacted by the emergence of free online
telephony products such as Skype, as well as increasing competition in a number
of markets.

“We’re a mobile consumer company today. A very large
percentage is purely the consumer side. We need to move into the enterprise and
the ICT sector, and become an integrated service provider. It’s one of the
reasons that when we talk about the M&A, we’re looking at those data centres
and fibre plays. We think most of the growth is going to come from that area,”
Gegenheimer added.

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