Zain’s interest in India raises questions over valuations

Confirmation that Zain continues to actively assess opportunities for an acquisition in India raises an interesting prospect with respect to the amount the Kuwait-listed company would be willing to pay given the state of the global economy. Foreign investors that tied up deals last year, including Etisalat, Telenor and Batelco, paid high premiums for stakes in the greenfield Indian licensees.

India is a country adding close to 10 million mobile subscribers a month

According to news wire reports, Zain continues to consider investments in Datacom Solutions or Loop Telecom, two companies it had looked at last year. The two privately owned companies hold GSM licences to provide services across India.

Datacom is 64 per cent owned by consumer goods maker Videocon, with the rest being held by a family-owned venture of Mahendra Nahata, the chairman of Himachal Futuristic Communications.

Loop Telecom is a subsidiary of BPL Mobile Communications, and had also held discussions with Telenor before the Nordic operator opted to invest in Unitech Wireless instead. Essar group controls BPL Mobile.

Last August BPL Mobile engaged two advisors to counsel it on the divestment of its majority stake of 74 per cent in Loop Telecom. Back then Loop Telecom was valued at around US$2 billion. The Essar group has a stake of 9.9 per cent directly in BPL Mobile while another 16.1 per cent is owned by Capital Global. The rest of the shareholding of 74 per cent is owned by BPL Communications.

India adds close to 10 million new mobile subscribers a month and counted 376.12 million users at the end of January, according to the Telecommunications Regulatory Authority of India.