Telco Zain says Bahrain unit gets nod for share listing

Wed Apr 10, 2013 10:25am EDT

* Zain Bahrain planned IPO in 2008, but sale was abandoned

* Unit's 9-mth profit to Sept. 30 fell by more than half

By Matt Smith

DUBAI, April 10 (Reuters) - Telecom operator Zain's Bahraini unit has received government approval to launch a long-awaited initial public offering (IPO), the company said on Wednesday.

Former Kuwaiti monopoly Zain did not provide further details on the IPO, although a local Bahrain newspaper said the unit had been ordered by the cabinet to float 15 percent of its shares.

Bahrain's second mobile licence was awarded to Zain in 2003 - ending Bahrain Telecommunications Co's (Batelco) monopoly - and the unit had planned to launch an IPO in 2008, only for the share sale to be abandoned.

Since then, Zain Bahrain's competitive position has deteriorated following the 2010 launch of third mobile operator Viva Bahrain, a subsidiary of Saudi Telecom Co, which has slashed prices to woo customers.

Zain Bahrain's net profit for the nine months to Sept. 30 fell by more than half and its revenue fell 5 percent over the same period, so now may be an inopportune time to float.

Zain holds a 56.3 percent stake in Zain Bahrain. Other shareholders include Zain Bahrain's chairman, Sheikh Ahmed bin Ali Abdulla al-Khalifa, who owns 16.3 percent, while Vodafone and a government pension fund own 6.1 and 4.7 percent respectively, according to research by Zawya, a Thomson Reuters company.

It is unclear whether existing shareholders will sell shares in the IPO on a proportional basis, thereby taking Zain's stake below 50 percent.

Zain Bahrain would likely list on Bahrain's bourse, which has a combined market value of $16.3 billion.

Trading is thin, with daily volumes averaging 3.4 million over the past year, according to Reuters data. This activity is concentrated among a few stocks, with only five seeing more than 50,000 shares change hands on Wednesday.

"The cabinet decision is also a signal that the time is right for an IPO and the market is ready," Zain Bahrain chairman Sheikh Ahmed said in a statement issued by parent Zain.

The Telecommunications Regulatory Authority (TRA) was not immediately available for comment.