Telecoms provider Zain to boost network with IPO of Bahraini unit

Out-Law News | 05 Aug 2014 | 5:20 pm | 1 min. read

Kuwait-based telecommunications provider the Zain Group said it will launch an initial public offering (IPO) of its Bahraini unit in September 2014.

The group said nearly all the cash raised from the IPO will be used to fund upgrades of its network infrastructure as well as expand its 4G service in Bahrain. The group is offering 48 million shares, or 15% of Zain Bahrain, at 0.19 Bahraini dinars ($0.50) per share.

The IPO will be open to retail and institutional investors in Bahrain and institutional investors in the Gulf Cooperation Council countries, said Zain, which owns 63% of Zain Bahrain.

Zain was launched in Kuwait in 1983 as the Mobile Telecommunications Company (MTC), which was the region’s first mobile operator. The group has since expanded in the Middle East and Africa through the acquisition of several mobile operators. MTC was re-branded as Zain in 2007.

In 2010, Zain sold its ‘Zain Africa’ division to India’s Bharti Airtel Limited for $10.7 billion “to focus on its highly cash generative Middle East and North Africa operations”.

As of June 2014, Zain said it provides a range of mobile voice and data services to a base of more than 46.5 million active customers. The group operates as Zain in Bahrain, Jordan, Kuwait, Iraq, Saudi Arabia, Sudan and South Sudan and as ‘Touch’ under a management contract in Lebanon.

In first half 2014 results announced in July, the Zain Group said revenues increased by 3% to $2.23bn while net income rose by 3% to $407 million compared to the same period in 2013.

In Bahrain, Zain said its nationwide network had recently been upgraded to 4G LTE, “priming the operation for increasing its market share, and exponentially increasing its data revenues”.

Zain Group chief executive officer Scott Gegenheimer said: “Several key markets continue to perform well and we are focused on further exploiting our state-of-the-art infrastructure and focusing on new sources of incremental revenue including digital services, which have been growing at an impressive rate.”

Bahrain’s two other mobile service providers are Batelco and Viva Bahrain. Viva is owned by the Saudi Telecom Company and entered Bahrain in 2010. There are several other companies providing internet services.

According to recent projections by Deloitte, small-to-medium sized enterprises (SMEs) in the Middle East will increase their expenditure on information and communication technology services by more than $2bn to $22bn in 2014, representing a 10% increase compared to 2013. Deloitte said the investment will be “driven by ongoing expansion in the number of SMEs and their needs in key services, such as web-presence, e-commerce and cloud computing”.