Zain's future unclear as consortium gains control

Questions linger over the future of Zain after an Indian-Malaysian consortium announced its intentions to acquire a controlling stake in the company. Management at the telecommunications giant made no comment following the announcement and have not discussed the deal with the stock market or media. Leading the buyout is India's Vavasi Group, joined by the Malaysian billionaire Syed al Bukhary. Agreements with other consortium members are under way.

"We have already shortlisted a couple of companies whose aspirations converge with our own," said Farid Arifuddin, the managing director of Vavasi, referring to two Indian telecoms firms. Investors from the Gulf could also join the consortium, he added. Mr Arifuddin said the "spectacular performance" of Zain's management, led by the chief executive Saad al Barrak, meant there should be "no need to disrupt" the current leadership team and no need to shift the focus and strategic direction of the business. But the sale agreement, and comments surrounding it, suggest that Mr al Barrak's negotiations to sell Zain's assets in sub-Saharan Africa have come to an end.

Until recently, Kharafi was known to hold about 10 per cent of Zain, but on Monday Kharafi told the market that a subsidiary, Al Khair National, was in the process of selling 46 per cent of Zain. "I presume that a good amount of this stake is already under their control," Mr Arifuddin said. Bard al Kharafi, the vice president of Kharafi Group, expressed confidence that the company would be able to assemble the required number of shares. "Al Khair group signed to provide 46 per cent," he said, "and God willing, we are able to get this percentage." Mr al Barrak recently told Reuters that he was aware of the stake sale being led by Kharafi, but his management team were not involved in discussions.

Whether Mr al Barrak was aware of the sale discussions while proposing his own asset sale to other groups of investors remains one of many questions to be answered by Zain in the coming days. [e-mail]