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EXCLUSIVE-UPDATE 1-UAE's Etisalat eyes majority in Kuwait's Zain

Published 07/21/2009, 06:12 AM
Updated 07/21/2009, 06:16 AM
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By John Irish and Rania el-Gamal

DUBAI/KUWAIT, July 21 (Reuters) - Emirates Telecommunications Corp (Etisalat) is interested in buying a 51 percent stake in Kuwait's Zain Group at the right price, the chief executive of its international unit said on Tuesday.

"We are interested in Zain as a whole, given the right values ... We need to sort out the overlap in Saudi Arabia and Nigeria," Jamal al-Jarwan told Reuters in a telephone interview.

"We're looking at a 51 percent stake in Zain," he added.

Etisalat, which operates in 18 countries including Egypt and India, is one of a number of Gulf Arab telecom operators that have expanded overseas after losing their monopolies at home.

Zain, which is partly owned by the country's sovereign wealth fund, said on Monday it still hoped to sell its African unit despite French media and telecoms giant Vivendi calling off talks to buy a majority stake in the business.

Etisalat's Jarwan said the region's largest operator by market value was interested in "the whole package" and not just Zain's African unit.

"We overlap with Zain in many countries, but overall we're looking at it," he said. "Zain makes a compelling story for us."

Jarwan declined to comment on whether it was already talking to Zain about the possibility of taking a stake.

"Zain has no comment on that," Zain's spokesman Ibrahim Adel told Reuters on Tuesday.

Zain has a market capitalisation of about $17.3 billion and a potential deal would be one of the region's largest mergers and one of the first cross-border deals.

Etisalat is facing stiffer competition in its home market of the United Arab Emirates, where some analysts predict that a wave of job cuts could lead to a population decline, which would weigh on the profits of Etisalat and rival du.

Etisalat bought a 45 percent stake in new Indian operator Swan Telecom for about $900 million last year.

"I don't think a takeover is possible because there are strong national interests in play here," said an analyst who asked not to be identified. "Etisalat has a history of expanding through smaller operators, obtaining licences, not through multi-billion (dollar) deals." (Reporting by John Irish; Editing by Amran Abocar/Will Waterman)

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