BSNL, MTNL consortium begins talks to acquire Zain

BSNL, MTNL consortium begins talks to acquire Zain

Geneva: A group of investors including state-owned phone companies Bharat Sanchar Nigam Ltd(BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) are in talks to acquire a stake in Zain Telecom, Kuwait’s biggest phone services provider, which has a presence in 24 countries.

“We have started the process of negotiations for acquisition of a controlling stake in Zain," BSNL’s chairman and managing director Kuldeep Goyal told reporters on Monday on the sidelines of an International Telecommunication Union conference in Geneva.

Goyal said the consortium was looking to acquire at least a 50% stake with management control. “We’ll prefer a controlling stake (more than 50%)," he said.

The price of a controlling stake in Zain Telecom has been previously estimated at about $14 billion (Rs66,500 crore).

BSNL and MTNL are among a proposed group of investors led by the little-known Vavasi Group and Malaysia-based billionaire Syed Mokhtar Al-Bukhary, Mint reported on 9 September.

Still, BSNL may not want to pick up a stake in Zain Telecom because it wants to hold on to its cash to maintain interest earnings, and pay for third-generation, or 3G, spectrum and an ongoing restructuring programme critical for long-term profitability, said a top company official in a report published by Mint on 15 September.

The Vavasi Group’s Telegence unit and Al-Bukhary lead the group that includes the Indian state-owned telecom companies, but the exact proportion of the stakes to be held by the four partners is unclear.

Goyal did not comment on the stakes of individual members of the investors’ group, saying that such issues would be part of the negotiations.

Telecom minister A. Raja said BSNL and MTNL had the freedom to pursue a stake purchase, although a final decision, if a deal was reached, was subject to approvals from various Indian ministries and the cabinet.

“It’s well within the scope of the PSUs" or public sector undertakings, the minister said. “They have every right to go global."

If the department of telecommunications concludes that the stake purchase would be detrimental to the interests of BSNL and MTNL, only then would it step in and seek clarifications from the state-owned telecommunication firms, Raja added.

On Sunday, the Kharafi Group, one of the largest shareholders of Zain Telecom, said that it had received expressions of interest from a group of investors, including BSNL, MTNL, Vavasi and Al-Bukhary for acquiring up to a 46% stake in the Kuwaiti phone company.

Mint’s Shauvik Ghosh contributed to this story.