Kuwaiti-based mobile telecommunications company Zain has recently announced plans to raise around $4.4 billion to finance its expansion in the Middle East and African (MEA) markets. The money will be raised through the sale of shares, at $3.10 each, to existing investors.
The idea behind an MEA expansion plan is to escape a competitive local market and find unsaturated markets ripe for growth, according to market analysts.
Zain (formerly MTC) is the parent company of Celtel International. The group is operational in 22 countries: seven in the Middle East and 15 in sub-Saharan Africa.
Antoine Aboukhalil, external communications manager at Zain, said he could not be specific as to where the capital would be channelled, due to the evolving MEA telecommunications market which presents constant opportunities.
"The company operates by an expansion strategy that requires capital to be readily available in order to snap up opportunities as and when they arise.
"We have openly stated that we plan on being a top-10 mobile operator on the globe by the year 2011," he said. "However, we will not enter a new market unless it makes good commercial sense and the investment can be justified as increasing shareholder value."
Aboukhalil says capital increase will occur soon after the approval by the annual general assembly, which is expected to be held around mid February 2008.
He said that separately, both the Middle East and African markets are growing phenomenally and would receive equal financial attention when the capital was raised.
The Middle East market would generally receive large financial investment towards the development of 3G networks, he noted.
"The growing demands for these services are high, especially in wealthy markets like Kuwait, Saudi Arabia and Bahrain."
There will be more focus on expanding 2G and 2.5G networks in sub-Saharan Africa, he said. Investment would be made towards rolling out more infrastructures in the countries where Celtel is already operational.
"Countries like Congo, Nigeria and Sudan are virtually the size of Europe, so the company has a mission to invest towards infrastructure in these regions."
Aboukhalil said the main achievement made by the group in 2007 was the investment towards infrastructure roll-out in Nigeria, which saw the subscriber base increase from 5 million to 10 million subscribers in 18 months.
"This is the kind of growth we are seeking in existing and potential operations and acquisition in the MEA through the finance of the capital raised," he added.
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