Omantel Nominates New Board Members to Zain Group

Oman Telecommunications S.A.O.G announced today the nomination of four new members to the Board of Directors at Mobile Telecommunications Company KSCP ‘Zain’. Including the appointment of Talal Al Mamari, CEO of Omantel, as a Non-Executive Director on 19 September 2017, Omantel will have a majority on Zain’s board with 5 of the 8 seats.

Talal Said Marhoon Al Mamari, Chief Executive Officer, Omantel and Non-Executive Director of Zain said: “We welcome the nomination of the four new members to Zain’s Board of Directors. We look forward to working closely with the management teams and our fellow board members with the aim of bringing our two complementary businesses together and creating a new digital telecom powerhouse in the region. The new group has a balanced and diversified portfolio of growth and cash generative assets across nine markets. Bringing these assets together will  generate synergies across wholesale, procurement and knowledge sharing along with increased collective exposure to high growth potential markets.”

Acquisition

On 12 November 2017, Omantel won the bid to acquire 12.1% of the issued share capital in Zain, making Omantel the second largest shareholder in Zain with a 21.9% stake. The total equity value is US$ 2.19 billion (OMR 845 million) and includes the previously announced acquisition on 24 August 2017 of 9.84% of the total fully paid and issued share capital.

The new group will be the third largest telecoms group in the Middle East and North Africa, with over 52 million customers.

This transformational transaction propels Omantel and Zain into a new era, bringing together a unique portfolio of leading telecom operations with balanced assets for profitability and growth. The transaction will bring economies of scale and sizable synergies making the new group more agile and efficient.    

Synergies will come from integrating the wholesale network with Zain’s, merging operations such as procurement, cooperating across our commercial activities and through shared investments in research and development. Omantel is targeting run rate synergies of over US$ 80 million per annum.

Omantel will be fully consolidating Zain’s financials and presenting a combined set of Q4 and full year 2017 financial results in the next quarter.

Omantel will finance this transaction with a combination of long-term and bridge loan facilities. The bridge loan facility will subsequently be recapitalised through bond-type instruments.

Compelling Strategic Benefits:

-  Better positions the new group to drive digitisation: the global telecoms industry is being shaped by huge changes in consumer behaviour as a result of the rise in data use and demand for digital. The new group is a new regional telecoms powerhouse capable of leading digital transformation across the Middle East and North Africa to match consumer’s demand. It brings knowledge and experience in the digital space that allows Omantel to realise its ambitions via diversification and international expansion. Omantel gains access to growth markets with a total population of 175 million people.

-  Creates significant opportunities for synergies – initial focus on wholesale business: Omantel expects the transaction to yield immediate synergies. The anticipated run-rate benefits for the new group are above US$ 80 million p.a. These are expected to come from the wholesale business, consolidation of operational and capital expenditure, strengthening of joint operations, networks and commercial activities. For example, Omantel’s wholesale business is one of the world’s leaders in submarine cables and the first in GCC to land and operate undersea cable in Europe. It will provide Zain with direct access to its extensive wholesale infrastructure, which among the many services it allows, will reduce the cost of incoming and outgoing traffic and faster internet delivery.

-  Expands product portfolio and services: Omantel gains access to a fast growing and lucrative portfolio of diversified products and services which includes data monetisation, enterprise B2B, fixed broadband, fibre-to-the-home and smart city initiatives. The acquisition will provide Omantel with significant growth drivers for these products and services and fits in perfectly with its Corporate Strategy 3.0, which is focused on bringing further value to Oman.

-  New organisation to support value creation: Omantel will be represented by five board members. Omantel intends to be an active shareholder and capitalise on the strategic benefits of cooperation. Omantel and Zain will put in place structures to secure a successful integration of the two groups and ensure timely synergy delivery.

Advisors

Credit Suisse acted as exclusive financial adviser and Freshfields Bruckhaus Deringer LLP as legal adviser to Omantel.

Visit https://www.amazinghappenstogether.com/ for an in-depth look into Omantel’s investment for the future.

Omantel Conference Call and Webcast

Omantel will host a conference call today, Monday 13 November 2017 at 16.00 (Oman Time Zone) to discuss the transaction with the financial community. The conference call* details are as below.

WEBCAST INVITATION – PARTICIPANTS

(NOTE: PARTICIPANTS WILL USE THIS LINK TO REGISTER AND JOIN THE LIVE EVENT)
https://digital.vevent.com/rt/brunswickgroup/index.jsp?seid=12

CONFERENCE CALL INVITATION – PARTICIPANTS

Participant UK Free Call Dial-In Numbers:  United Kingdom 08003767922

Participant Std International Dial-In:  +44 (0) 2071 928000

Conference ID: 6591499

* Please connect to both the Audio and Web session at least 10 minutes prior to the event.