Zain eyes $3-4 billion for acquisitions
By Ulf Laessing and Rania El Gamal, KUWAIT, Nov 6, 2008 (Reuters)
Kuwait's Mobile Telecommunications Co (Zain) plans to make four to five acquisitions worth up to $4 billion before 2010 with the global credit crisis depressing asset prices for telecom firms, its chief executive said.
Zain would seek to expand in Africa and the Middle East by buying majority stakes in companies or acquiring licenses, Saad al-Barrak told the Reuters Middle East Investment Summit being held this week in Kuwait and Dubai.
The third-largest Arab telecoms firm -- which already operates in 22 countries -- is looking at opportunities in South Africa, Rwanda, Cote D'Ivoire, Mali, Mozambique, Yemen, Syria and even Zimbabwe, a country ravaged by economic chaos and the world's highest inflation.
"That's the whole point ... Wherever there is danger there is opportunity, so you find us always swirling around danger," he said, when asked whether Zain could buy a Zimbabwe operator.
"In view of the current situation we have $3 to $4 billion in mind over the next 12 months," Barrak said late on Wednesday, alluding Zain could spend even more as it was keen to enter the "rest" of the Middle East where it was not active yet.
Up to $4 billion would be a "worst scenario in light of the credit crisis," he said. "We have bigger ambitions than that."
Zain would seek to buy 60 percent of its acquisition targets, but at least 51 percent, and would also consider moves into Asia from 2011 as part of plans to become one of the top 10 telecom operators in the world, Barrak added.
"Asia was always on our radar but we were too busy ... Still areas of great interest to us are Iran, Pakistan, India, Indonesia, Malaysia, Cambodia, Vietnam, Thailand," he said.
"We are focusing now on our priority in the Middle East and Africa were we want to become the absolute number one," he said.
Zain also planned to spend $2.5 billion in 2009 on general capital expenditures such as upgrading networks or investing, down from $3 billion this year, Barrak said.
To finance its growth, Zain would need to borrow $1.5 billion to $2 billion which Barrak is was confident of getting despite the credit crisis, he said. It already raised $4.5 billion through a rights issue in September despite a bourse slide.
EUROPEAN OFFER ON HOLD
Zain has been spending billions of dollars to expand abroad as competition heats up at home where VIVA, an affiliate of Saudi Telecom 7010.SE, is set to start operations by year-end.
Zain spent $3.4 billion on buying Celtel in 2005 and led a consortium to win a third Saudi mobile license for $6.1 billion.
Barrack said the Saudi operations, which drew over 1 million customers in under two months, would make a profit in three years.
EUROPEAN SHARE OFFER?
However, while the global financial turmoil has created opportunities for Zain to snap up assets it was not the right time to launch planned share sales in Europe and Bahrain, he said.
Zain said earlier this year it might raise up to $5 billion in an offering on a European exchange such as London (LSE.L: Quote, Profile, Research, Stock Buzz) or on Euronext NYSE in Paris.
"We are ready (for these offerings) but we will wait until markets improve," Barrak said.
Zain, meanwhile, would stick with a 2009 profit growth forecast of 30 percent, Barrak said, adding he expected earnings before interest, tax, depreciation and amortization of $4 billion and revenue of $9-$9.5 billion next year.
Net profit in 2008 would total around $1.18 billion, or roughly 320 million dinars, this year -- on a par with 2007 earnings of 320.45 million dinars. The company had earlier forecast earnings growth of 5 percent this year.
He added EBITDA would hit $3 billion this year after $2.56 billion in 2007, while revenue would rise to $7.2 billion from $5.91 billion the previous year, confirming earlier targets.
($1=.2695 Kuwaiti dinars)
Kuwait's Mobile Telecommunications Co (Zain) plans to make four to five acquisitions worth up to $4 billion before 2010 with the global credit crisis depressing asset prices for telecom firms, its chief executive said.
Zain would seek to expand in Africa and the Middle East by buying majority stakes in companies or acquiring licenses, Saad al-Barrak told the Reuters Middle East Investment Summit being held this week in Kuwait and Dubai.
The third-largest Arab telecoms firm -- which already operates in 22 countries -- is looking at opportunities in South Africa, Rwanda, Cote D'Ivoire, Mali, Mozambique, Yemen, Syria and even Zimbabwe, a country ravaged by economic chaos and the world's highest inflation.
"That's the whole point ... Wherever there is danger there is opportunity, so you find us always swirling around danger," he said, when asked whether Zain could buy a Zimbabwe operator.
"In view of the current situation we have $3 to $4 billion in mind over the next 12 months," Barrak said late on Wednesday, alluding Zain could spend even more as it was keen to enter the "rest" of the Middle East where it was not active yet.
Up to $4 billion would be a "worst scenario in light of the credit crisis," he said. "We have bigger ambitions than that."
Zain would seek to buy 60 percent of its acquisition targets, but at least 51 percent, and would also consider moves into Asia from 2011 as part of plans to become one of the top 10 telecom operators in the world, Barrak added.
"Asia was always on our radar but we were too busy ... Still areas of great interest to us are Iran, Pakistan, India, Indonesia, Malaysia, Cambodia, Vietnam, Thailand," he said.
"We are focusing now on our priority in the Middle East and Africa were we want to become the absolute number one," he said.
Zain also planned to spend $2.5 billion in 2009 on general capital expenditures such as upgrading networks or investing, down from $3 billion this year, Barrak said.
To finance its growth, Zain would need to borrow $1.5 billion to $2 billion which Barrak is was confident of getting despite the credit crisis, he said. It already raised $4.5 billion through a rights issue in September despite a bourse slide.
EUROPEAN OFFER ON HOLD
Zain has been spending billions of dollars to expand abroad as competition heats up at home where VIVA, an affiliate of Saudi Telecom 7010.SE, is set to start operations by year-end.
Zain spent $3.4 billion on buying Celtel in 2005 and led a consortium to win a third Saudi mobile license for $6.1 billion.
Barrack said the Saudi operations, which drew over 1 million customers in under two months, would make a profit in three years.
EUROPEAN SHARE OFFER?
However, while the global financial turmoil has created opportunities for Zain to snap up assets it was not the right time to launch planned share sales in Europe and Bahrain, he said.
Zain said earlier this year it might raise up to $5 billion in an offering on a European exchange such as London (LSE.L: Quote, Profile, Research, Stock Buzz) or on Euronext NYSE in Paris.
"We are ready (for these offerings) but we will wait until markets improve," Barrak said.
Zain, meanwhile, would stick with a 2009 profit growth forecast of 30 percent, Barrak said, adding he expected earnings before interest, tax, depreciation and amortization of $4 billion and revenue of $9-$9.5 billion next year.
Net profit in 2008 would total around $1.18 billion, or roughly 320 million dinars, this year -- on a par with 2007 earnings of 320.45 million dinars. The company had earlier forecast earnings growth of 5 percent this year.
He added EBITDA would hit $3 billion this year after $2.56 billion in 2007, while revenue would rise to $7.2 billion from $5.91 billion the previous year, confirming earlier targets.
($1=.2695 Kuwaiti dinars)
