Kuwaiti telecom giant Zain abolished decades-old restrictions on ownership on Monday to enable foreign investors to take up a majority stake in the emirate's oldest mobile operator.
Shareholders agreed at an extraordinary meeting to abolish two articles in the company's statute which prevented any local or foreign investor from owning a stake of more than five percent.
Zain chief executive Saad al-Barrak told reporters that the amendment would open the door for "foreign investors to own a majority stake in the company."
The move follows reports that several foreign telecom operators were in talks with Zain's major Kuwaiti shareholders to buy a majority stake in the company which serves more that 65 million clients in 23 countries.
Barrak said the board of directors was unaware of any such talks and was not involved in takeover negotiations.
"These things are left to shareholders themselves to decide. We made the change today to encourage people to buy more shares into Zain. We are opening up in line with globalization," Barrak said.
Zain is also in talks to sell a stake in its African operations and "all scenarios are possible," Barrak said.
Barrak said the telecoms firm was in talks with a number of partners concerning the assets.
"There is a demand (for) African assets beyond what we expected. There are a number of partners interested and we are still in preliminary talks," he said.
"These are still preliminary talks, not full negotiations yet," Barrak added but declined to name the companies.
"The only thing I can say is that we have turned down an offer from (French media and telecom group) Vivendi," Barrak said without specifying the amount offered. Analysts estimated the offer at around 11 billion dollars.
Asked whether Zain was in talks to sell a stake in the entire company, Barrak said: "In Zain Group, no."
Zain began its African operations in March 2005 when it acquired the Dutch Celtel assets in 13 African nations for 3.5 billion dollars. Later it paid several billions of dollars to expand its operations into other African countries.
In 2007, it paid 6.1 billion dollars for the third mobile license in Saudi Arabia. To meet this huge financial obligation, Zain increased its capital and took several loans.
Zain also suffered as a result of the global economic meltdown and decided in May to lay off 2,000 jobs, or 13 percent of its 15,500 workforce, in a bid to improve its operating margin by five percent in the following 12 months.
Since news came out about the possible sale of its African assets or a majority stake in the group, Zain share price rebounded remarkably.
It has gained 81 percent over the closing price of last year and as much as 138 percent since March 1 when it slumped to the lowest level in several years. Its capitalization now stands at 22.6 billion dollars.
Zain, in which the state owns a 24.6 percent stake, is one of three mobile operators in Kuwait, along with National Telecommunications Co (Wataniya) and Kuwait Telecommunications Co (VIVA).
Qatar Telecom owns a majority stake in Wataniya while VIVA is run by the Saudi Telecom Co.