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Vivendi takes over Zain Africa with $12bn bid

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France’s largest entertainment group Vivendi, has reportedly taken over Zain Africa with a $12 billion bid, ending speculation regarding the future of the ailing telecoms giant.
The Monitor in Uganda reported that the move signals an ironic return for the French firm which was forced to sell its stake in its Kenyan operation after the second tech bubble burst in 2003.
The newspaper said that Vivendi which is also Europe’s largest entertainment group returns as a more healthy operation keen to capture a share of the growing African telecoms market which it was forced to abandon a few years ago.
Zain_CEO.jpgThough there was no direct confirmation from both companies and their transaction handlers, the Monitor said it’s sources familiar with the transaction said it had been recently completed, clearing the way for a new owner for the local operation.
Zain Group, the Kuwaiti based mobile telecommunication company with operations in 22 countries in Middle East and Africa, has been in negotiations with Vivendi for weeks now.
The sale will mark another turning point in Kenya’s second largest and oldest mobile services provider’s colourful history. In Kenya Zain began life as Kenya Cellular Communications Ltd, or Kencell a joint venture between Vivendi of France and Sameer Investments of Kenya.
Sameer is controlled by Naushad N. Merali, one of Kenya’s wealthiest investors and former President Daniel Arap Moi.
At the time, the shareholding in Kencell was 40 percent for Vivendi and 60 percent for Sameer, in line with regulations of the Communications Commission of Kenya. Between 2000 and 2003, Kencell grew very fast due to its high quality voice and data network.
But poor revenue and high operational costs saw Kencell post huge losses in the period between 2003 and 2004. After the string of losses and stunted growth of the operator in 2005 Vivendi opted out of the venture selling off her 40 percent stake in Kencell to Celtel International. The buyout saw the operator rebrand to Celtel Kenya.
In only one year, Celtel International transformed the fortunes of the operator drastically. In 2005, the operators profitability changed by 175 percent posting profit after tax of $17 million from the loss after tax of $25 million incurred during 2004. This was the first time the company has made profits. But the following year was not as profitable as the operator only managed $ 1 million. By the time operator changed hands, again, in 2008 it had stopped making its results public. Yet interestingly, although Celtel Kenya was making only modest profits the rest of Celtel operations in Africa were posting impressive results.
Last year, Celtel International was bought out by Zain Groups predecessor Kuwaiti’s Mobile Telecommunication Company (MTC) at an all cash offer of
$3.4 billion. The buyout was to usher in the rebranding of Celtel to Zain.
As the holding company, Zain has been very profitable. In the year ended December 31, 2008 Zain Group posted record results for the financial year ended, with revenues increasing by 26 per cent to reach $7.441 billion, although fourth quarter results were hit by currency fluctuations.

ITNewsAfrica.com Kenya


3 COMMENTS

  1. please send me application form via my email for internships for the course of IT(networking).

  2. This is a funny deal as I thought the deal was initially worth about $22Billion. Why the sudden drop?

    What is the fate of Zain Nigeria?

    Is she going to change name again?

    I need answer to my questions please

Comments are closed.

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