Paltel close to Zain merger
Zain is in the final stages of agreeing a deal to take control of Palestinian incumbent Palestinian Telecommunication Company (Paltel) in an all share deal.
Paltel's board of directors has agreed to the terms of the strategic partnership with Zain and has called an extraordinary general meeting to coincide with its ordinary general meeting on March 5. The EGM will be used especially to discuss and possibly announce the deal with Zain, as the Palestinian authorities should have approved the final version of the agreement by then.
A source at Paltel told TelecomFinance that Zain would be taking a stake of at least 50% in the company in exchange for an as yet unspecified stake in the Kuwaiti operator.
"The deal is still in the process of being finalised so the exact structure is still not clear for many of the guys at Paltel," said the source. "Paltel will have a stake in Zain but the percentage is not clear yet. The employees need to know what is going on soon though because they don't know whether to feel optimistic or not," said the source.
Paltel, which would be renamed Zain Paltel or Zain Palestine, has also proposed a capital increase that will be discussed at the EGM. The size of the increase and whether it will be on behalf of Zain or Paltel still needs to be discussed and clarified.
Meanwhile, Paltel CEO Abdul Malik Jaber has resigned from the company, due to the proposed new ownership structure, leaving the chairman Subaih Al Masry to conduct the negotiations with Zain.
For its part, Zain confirmed its interest in a statement to the Kuwait stock exchange that read: "Zain is engaged in negotiations to enter a strategic partnership in Paltel."
The acquisition of Paltel would be a bold move for Zain but in keeping with its ambitious plans to have complete Middle Eastern coverage. It already has operations in two of Palestine's neighbouring countries Jordan and Lebanon.
Paltel was established in 1997 and is still the only official operator in the market although Kuwait's Wataniya does have a licence and hopes to begin operations early this year.
According to The Mobile World, Palestinian Territories had a population of around 4.2 million at the end of 2008 with mobile penetration levels at around 45%.
