Zain Saudi will push ahead with a multibillion dollar capital restructuring following the failure of a $950 million stake sale last week, the chairman of the indebted telecoms operator said.
The firm, which launched services in 2008, must cut its capital to comply with Saudi Arabia bourse rules, having racked up about $2.3 billion in accumulated losses.
On Thursday, Bahrain Telecommunications and Kingdom Holding Co. withdrew their offer to buy Kuwait Zain’s quarter-stake in its Saudi affiliate.
“We expect (to) achieve high growth levels and turn into profit as soon as the period for capital restructuring is completed, which we expect to speed up after the failure of the deal to sell Zain Kuwait’s share,” Zain Saudi Chairman Prince Hussam bin Saud wrote in an e-mailed response to Reuters.
Zain Saudi’s board had proposed to restructure its capital in August 2010 and in February said it would ask shareholders to approve slashing its capital by 55 percent to SR6.3 billion ($1.68 billion).
It said it would then issue SR4.4 billion of new shares, but this plan was held up as first Zain and then Zain Saudi were the subject of failed takeover bids.
Zain Saudi’s debts top $5.5 billion and it has yet to make a quarterly profit.
Analysts say Zain Saudi’s $6.1 billion license fee has left it short of cash and struggling to compete in Saudi’s Arabia’s saturated mobile market.
Mobile penetration was 188 percent in 2010, the third highest in the world, while Zain Saudi’s market share fell to 16 percent from 18 percent a year earlier, leaving a distant third to rivals Saudi Telecom Co. and Etihad Etisalat.
(C) Arab News
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