United Arab Emirates telecommunications giant Etisalat has dropped its $12 billion bid to take a large portion of Kuwait’s Zain telecom company. The removal of their attempt to take over the Gulf company means it is losing out on the Moroccan market, which analysts say would have continued the UAE-based company’s push into North Africa.
“They already have a spot in Egypt and that move has been seen to be extremely profitable, so adding Morocco to their list of markets could have done wonders to continue to push the company into North Africa,” said London-based telecom analyst Joseph Tarek. He added that the deal could have provided even more liquidity within Etisalat to establish itself as one of the top brands in the region.
“I am sure they are disappointed that they pulled out of the take over, but we will have to wait and see what will happen before saying it was the wrong choice,” he added.
With the deal falling through, Zain shares declined by 3 percent on Sunday.
The UAE-company said in a statement posted on the Abu Dhabi stock exchange’s website late Sunday that there was a lack of uniformity among the Zain board. The company also said political unrest in the region was a major determinant, although they did not elaborate further on the details.
“This is quite a disappointment for Etisalat. One of the key planks of their strategy is to try to increase their international revenues,” said Matthew Reed, a Dubai-based analyst at Informa Telecoms & Media, a research firm, in comments published by Bloomberg news agency.
“If Etisalat had got Zain, that would have represented a big boost to its regional and international portfolio.”
By Jonathan Terry