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Zain Enters into Agreement to Merge Jordan Operation with Palestinian Operator Paltel

2009-05-20 10:30
  • English
  • Through share-swap transaction, Zain Group will hold 56.5% stake in Paltel with Paltel owning 100% of Zain Jordan
  • Merger will generate over US$1 billion in annual revenues in 2009 with significant CAPEX and OPEX synergies
  • Deal will take Zain’s commercial footprint to 24 countries, operation to join ‘One Network’

AMMAN, Jordan--(BUSINESS WIRE)--In an official signing ceremony held in Amman, Jordan, Mobile Telecommunications Company KSC (“Zain”) and Palestinian Telecommunications Company Plc (“Paltel”) have entered into an agreement for a share-for-share exchange, which will see Zain take a majority interest in Paltel with an equity shareholding of 56.53% in exchange for Paltel owning 100% of Zain Jordan. Paltel is a publicly-listed entity on the Palestinian Stock Exchange and Abu Dhabi Securities Exchange. The merger will set the current Paltel shareholders equity position in both Paltel and its newly acquired subsidiary, Zain Jordan at 41.43%.* (for more details of transaction, see note below)

Through this transaction, Palestine will become the 24th territory in which Zain will have a commercial footprint. The mobile operation in Palestine currently known as ‘Jawwal’ will be rebranded to Zain by the end of 2009. This mobile operation will also join Zain’s renowned ‘One Network’ platform, taking to 19 the number of countries that benefit from One Network’s many advantageous roaming offerings.

The combination of both Zain Jordan and Paltel will produce a business group which will generate over US$1 billion of revenues, US$450m in EBITDA and US$300 million in net income in 2009 alone. Additionally it will result in significant synergies and efficiencies in CAPEX and OPEX spend and purchasing power, all of which will improve the profitability position of the group in line with Zain’s newly implemented ‘Drive11’ transformation program.

A merger of this nature, with immediate opportunities for synergies between the two leading operators in Jordan and Palestine, will create substantial value for shareholders and enable us to create a strong operating platform for our businesses in the Levant and beyond,said Dr. Saad Al-Barrak, Chief Executive Officer of Zain. “We have enduring faith in the Palestinian economy and are totally committed to future development of its telecom sector. This deal will play an instrumental role in supporting our 2011 ambitions of being a top-ten global mobile operator.”

Paltel, with a base of 1.5 million active mobile customers and over 363,000 fixed line customers, as well as approx. 78,000 ADSL customers as of March 31, 2009, has, since its establishment, demonstrated strong growth, resilience and an enviable track record in fixed and mobile voice, data and value added services. Zain Jordan, with over 2.35 million active mobile customers, has pioneered award-winning voice, mobile broadband and data services in the Jordanian market. Working together, both operators will be in a position to bring innovative services with wide-market appeal to Jordanians and Palestinians alike, strengthening the already entrenched positions of both operators in their respective markets.

“This partnership with a foreign strategic operator such as Zain represents a strong endorsement of the Palestinian economy and its capital market. This development will restore investor confidence in Palestine and is a proof point that the telecom sector is still buoyant and growth oriented. It also marks a new chapter in our business operations as we prepare for the upcoming market liberalization in the mobile telecommunications sector in Palestine,” said Mr Sabih Al-Masri, Chairman of Paltel.

The transaction will close in Q2, 2009 subject to the approvals of Telecommunications and Securities market regulators in applicable jurisdictions. Zain’s financial advisor was Global Investment House, whilst Paltel was advised by EFG Hermes.

*Source: ME NewsWire

Note to Editors

*The share-swap transaction involves an exchange of a total of 58.57% of Paltel’s shares for 100% of the shares of Pella Investment Company (“Pella”), the holding company of Jordan Mobile Telephone Services Company (“Zain Jordan”). Zain’s equity in Pella, at 96.516%, will be exchanged for 56.53% of Paltel’s equity whilst the balance of equity held by the other shareholder in Pella, 3.484%, will be exchanged for 2.04% of Paltel. Paltel will own 100% of the shares of Pella, and its underlying subsidiary, Zain Jordan.

For more on this announcement, please visit: http://www.zain.com/muse/obj/lang.default/portal.view/content/Investor%20relations/Press%20releases/PaltelDeal

For more on Zain, please visit www.zain.com

For more on Paltel, please visit www.paltelgroup.ps

Photo caption: Dr Saad Al Barrak, CEO of Zain and Paltel Chairman, Mr Sabih AL Masri at the signing ceremony held in Amman, Jordan May 18, 2009.

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=5967304&lang=en

 

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