* Talks broke down earlier this year - source
* Zain is Sudan's top mobile operator, lacks fixed line
* Canar is Sudan's No.1 fixed line operator
By Matt Smith
DUBAI, Dec 2 Etisalat could resurrect
talks to sell its Sudanese telecom arm Canar to Kuwait's Zain
, as both sides remain keen on a deal despite a
breakdown in negotiations earlier this year, a source close to
the matter said.
Zain Sudan is the African country's No.1 mobile company.
Buying Canar - the top fixed-line carrier - would be in line
with Zain's broader strategy, as outlined by chief executive
Scott Gegenheimer in October, of moving beyond mobile to provide
bundled services to corporates and individuals.
Etisalat took an impairment of 459 million dirhams ($125
million) against Canar in 2012 and may be eager to sell what is
a peripheral investment for the United Arab Emirates' firm.
"The deal fell apart at the last moment," the source said,
declining to be identified because the talks were not public.
Negotiations collapsed around the start of 2013, the source
said, with Etisalat thought to have backed out because it
believed other parties might consider buying Canar and so hoped
to get a better price for its subsidiary.
Zain remains interested in acquiring Canar, while Etisalat
was still a likely seller, the source said, describing a deal as
"a win-win situation" for both parties.
Etisalat did not respond to requests for comment and Zain
declined to comment.
Zain's 11.95 million subscribers gave it a 44 percent share
of Sudan's mobile market and $470 million of revenue in the nine
months to Sept. 30. Canar had 316,770 subscribers as of March
31, data from the country's telecom regulator shows.
Etisalat does not provide financial information on Canar,
but its consortium paid 45 million euros for Sudan's second
fixed-line licence in 2004 and the UAE firm later paid around
$276 million to up its stake to 89 percent from 37 percent.
This was part of Etisalat's rapid expansion last decade as
it sought to offset the loss of its domestic monopoly, but few
of its estimated $12.6 billion of foreign investments have paid
off and in recent years it withdrew from India and sold most of
its stake in Indonesia's PT XL Axiata.
In November, Etisalat agreed to buy a controlling stake in
Maroc Telecom for $5.7 billion, but analysts see little point in
the UAE firm retaining interests in minor players such as Canar,
especially after the Sudanese pound fell by about half against
the dollar following South Sudan's succession in 2011.
Canar hoped to obtain a mobile licence, its chief executive
told Reuters in 2008, but never did so and just 1 percent of
Sudanese had a fixed-line telephone connection at the end of
2012, according to Etisalat's annual report.
Canar's network covers 31 percent of Sudan's population.
($1 = 3.6730 UAE dirhams)
(Reporting by Matt Smith in Dubai; Editing by William Maclean
and Mark Potter)