After Zain finally released its detailed financial statement for its third-quarter earnings (
direct link to the PDF here), the regional telecommunication analysts earned their keep by releasing updated analysis reports.
Shuaa Capital's Simon Simonian breaks down the numbers, and what this means for the potential stake sale of Zain to a consortium of Indian and Malaysian firms after the break.
We reiterate that Zain has valuable assets with a scarcity premium
attached for any player looking to expand in the Middle East and Africa. We believe uncertainty related to the potential
sale of the company has undermined the performance in the quarter.
Consolidation in Africa is desirable and would
be beneficial for all players.
Our experience has shown that M&A
transactions in emerging markets are more complex to succeed. Based on media
reports, no due diligence process is under way for Zain's assets. As
previously discussed, even if a deal materializes, there's no assurance
that minority shareholders will benefit.
On a fundamental basis, we believe
that Zain shares are fully valued at the current price of 0.96 Kuwaiti dinars / share. We
maintain our sell recommendation.
Meanwhile, the Business Standard says that the state-owned Bharat Sanchar Nigam (BSNL) is likely to leave the
consortium led by Delhi-based Vavasi Group. BSNL allegedly left the consortium over disagreements on Zain's valuation and a new partner is expected to rejoin the deal by the end of the month, the paper says.
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