By Rania El Gamal
UPDATE 2: CEO says Kuwaiti mobile operator in early stake sale talks regarding African ops, but denies Vivendi deal.
Mobile operator Zain is in early talks with potential buyers for a stake in its African operations, but denied it had reached a deal to sell the unit to Vivendi, the firm's chief executive said on Wednesday."We are discussing... It is a number of companies who are interested in this partnership in Africa... There is nothing specific at all," Saad al-Barrak told Reuters in an interview.
"Partnership means bringing in another partner from 25 percent to whatever in Africa," he said, without being more specific. Zain operates in 17 African countries, according to its website.
Barrak denied a newspaper report that Zain had reached a deal to sell its African operations to Europe's largest entertainment group, Vivendi for $12 billion.
"There is no deal or anything. There is no deal reached and we are not even at this stage," he said, declining to identify any telecoms firm currently in talks with Zain for a stake in its African operations.
Zain, the Gulf Arab region's third-largest telecom firm by market value, said last week it was working with Swiss bank UBS and other consultants to review its strategy.
Barrak said he hoped Zain could finalise its strategy review before the end of August and would decide on the stake sale based on the outcome of the study.
"Either continue like we are or bring in a partner for (Zain Africa)," he said.
Zain has spent more than $12 billion in Africa since 2005, including nearly $3 billion in Nigeria, and said it planned to spend up to $2 billion more on the continent this year.
"Africa is the highest growth market in the world and that's why the whole market is interested in it," Barrak said.
Zain would be able to use the proceeds if selling a stake in its African operations for expansion elsewhere, said Jithesh Gopi, head of research at Bahrain's SICO Investment Bank.
"I think that would be a logical thing to do," he said. "If you want to expand, you can keep the majority stake and you can have a minority partner."
The operator, whose biggest shareholder is Kuwait's sovereign wealth fund, has spent heavily on expansion abroad as competition heats up at home. It operates in 23 countries in the Middle East and Africa.
Zain has no plans for more specific acquisitions this year but still finds Asia an interesting market to expand into, Barrak said, without elaborating.
Barrak reiterated net profit for the second quarter would be "very close" to the 75.7 million dinars ($262.9 million) it made in the first quarter, but the cost of investments would weigh on the bottom line.
"We are talking about like 3-5 percent above the (net profit) of the first quarter," he said.
"This year our target is a growth of 30 percent in EBITDA," he said, adding the firm still targets by the end of 2011 to reach $6 billion in EBITBA, or earnings before interest, tax, depreciation and amortisation, and 160 million customers.
"We have huge investments in building networks and branding," he said. "But we are continuing our business as usual despite all of these discussions and the interest in a partnership (with) Zain Africa." (Reuters)For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.