DUBAI (Reuters) - Oman Telecommunications Co. (Omantel) is to buy almost 10 percent of Zain Group for $846.1 million, the Omani firm said in a statement on Thursday.
The share purchase, subject to regulatory approval, was announced days before Oman is to shortlist qualified applicants for a third mobile license which Zain has bid for.
Omantel has agreed to buy 425.7 million Zain treasury shares - or 9.84 percent - in cash at a price of 0.60 dinars ($1.99) per share, the statement said.
The investment is part of Omantel’s strategy to diversify its exposure, the Omani telecommunications firm said.
Zain operates in eight countries in the Middle East and Africa, including Saudi Arabia, Iraq and Jordan.
The two firms will look to collaborate on the wholesale telecom business, operations and networks, and commercial activities, according to the statement.
Omantel is making a “deliberate investment” in Zain as part of its strategy to “position ourselves as a leading digital service provider,” said Omantel’s Chief Financial Officer Martial Caratti.
Credit Suisse is acting as the exclusive financial adviser and Freshfields Bruckhaus Deringer LLP as legal adviser to Omantel on the deal.
Omantel, which has about 41 percent marketshare and has operated in the country since 1970, reported declining profits in the first and second quarters. Zain posted consecutive quarterly flat profits.
Oman will shortlist applications for the third mobile license on Aug. 14, with the winning bid to be announced on Sept. 4.
Bidders include Saudi Telecom Co (STC) and the United Arab Emirates’ Etisalat.
Reporting by Alexander Cornwell; Editing by Sunil Nair