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Tue 2 Nov 2010 07:26 PM

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Zain, Etisalat said to sign term-sheet accord within a day

Deal would give Etisalat majority control of Zain and extend reach in the Middle East

Zain, Etisalat said to sign term-sheet accord within a day
BIG NUMBERS: Etisalat offers telecommunications services in 18 countries, counting more than 100 million customers

Zain and Etisalat expect to sign a term-sheet accord in the next 24 hours on the sale of a 46 percent stake in Kuwait’s biggest phone company to Etisalat for about $12 billion, a person familiar with the talks said.

The term-sheet agreement is set to be signed within a day after Emirates Telecommunications Corp or Etisalat as the UAE’s largest phone company is known, holds a board meeting today, the person said, declining to be identified because the talks are private.

The next step will be for Etisalat to submit a request to carry out due diligence of Zain, the person said. Abu Dhabi based Etisalat said on September 30 it offered 1.7 Kuwaiti dinars ($6.1) a share for the stake in Mobile Telecommunications Co, or Zain as the Kuwaiti company is known.

The sale is being led by the Kharafi Group, Zain’s second largest shareholder.

Salem Al Sharhan, chief financial officer at Etisalat, declined to comment as did a spokesman for Zain, who said the company doesn’t comment on its shareholders’ decisions.

The deal is valued on the basis of 4.3 billion Zain shares outstanding, which at current exchange rates makes the stake worth about $12.1 billion.

The deal would give Etisalat majority control of Zain and extend its reach in the Middle East, where Zain operates in countries from Kuwait and Iraq to Bahrain.

Etisalat offers telecommunications services in 18 countries in the Middle East, Africa and Asia, counting more than 100 million customers, according to its website.

The seven emirates of the UAE make up about 86 percent of Etisalat’s sales.

Etisalat had $3.08 billion of cash at the end of last year, earnings statements show.

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