(Adds comment from Omantel CEO, detail)
By Tom Arnold
DUBAI, Nov 12 (Reuters) - Oman Telecommunications (Omantel) will pay $1.35 billion to buy a further 12.1 percent stake in Kuwaiti telecoms company Zain in a deal that will expand its reach to nine Middle Eastern and North African countries.
It paid 0.781 Kuwaiti dinars ($2.58) per share, around 74 percent above the current listed price, for the stake, which will take its total shareholding in Zain to 21.9 percent. That will make it the second largest shareholder after Kuwait’s sovereign wealth fund, the Kuwait Investment Authority.
In an interview with Reuters, Omantel’s chief executive Marhoon al-Mamari said combined savings of about $400 million over the next five years and synergies would bring the transaction price down.
“The multiples paid by Omantel are equivalent or less than those paid for a similar transaction in the region,” he said.
“This transaction will bring in scale. Prior to this transaction, Omantel was operating in a single market, namely Oman, and Zain Group operates in nine markets.”
Omantel purchased the stake from investment vehicles linked to Kuwait’s Al Kharafi merchant family, following its acquisition of a 9.8 percent stake in Zain in August.
The purchase is aimed creating value for Omantel’s shareholders, diversifying its revenue sources and raising its regional scale, Omantel said in the bourse statement.
The company has no immediate plans to raise its stake further and its priority is to accelerate the leveraging of the company’s debt, al-Mamari said.
Four members of the Al Kharafi family currently sit on the board of Zain, according to its website.
Al-Mamari said the company would make an announcement on Monday about its plans for the board members and has no plans to change the management.
Omantel financed the deal with a combination of long-term and bridge loan facilities, led by Citigroup and Credit Suisse, with HSBC, Standard Chartered, Bank Muscat and Arab Banking Corporation also participating.
The syndication for the bridge loan was expected to be complete by the end of the year, said al-Mamari.
That will be followed by a roadshow early next quarter to convert around $1.4 billion of the debt into a bond or sukuk, or a mix of both, with maturities of five and 10 years. The capital market instrument should be completed by the end of the first quarter next year, he said.
Zain said last month it had entered into a deal to sell and lease back its portfolio of mobile phone towers in Kuwait for $165 million to IHS Holding Limited.
The sale of towers belonging to Zain’s affiliate, Zain Saudi, was at an earlier stage, with confirmation of that deal expected to be announced before the end of this year or early next year, said al-Mamari.
Zain Saudi, 37 percent-owned by Zain Group, said in August it had entered into exclusive talks with a consortium led by IHS Holding Limited and Towershare Management Limited for the sale and leaseback of its mobile towers.
$1 = 0.3027 Kuwaiti dinars. Additional reporting by Saeed Azhar; Editing by Catherine Evans