BAHRAIN-based cellphone group Zain is raising $4,5bn to finance its expansion in Africa and emerging markets, including India and China, as it marches towards its goal of becoming one of the top 10 global telecom operators by 2011.

The group, which is eyeing the South African market dominated by Vodacom and MTN, said yesterday the capital would be raised through a subscription of shares by existing shareholders registered as of March 10 when an extraordinary general meeting was held to approve the exercise.

“This capital increase is expected to raise $4,5bn, which the company will utilise to finance future expansion plans and meet financial commitments," the group said.

Shareholders have until September 18 to subscribe to the group's shares, which are priced at about $3,20 each.

“Zain’s current share price has been adjusted since March 11 to fully reflect the impact of the capital increase and the issuance of the new shares,” it said.

Group CEO Saad al-Barrak said he was confident Zain, which operates in 22 countries with more than 50-million active customers, was confident it would raise the required amount. He said shareholders had shown their confidence in its ability to grow its geographical footprint across Africa and the Middle East. In Africa, Zain has operations in 14 countries and would be launching a new network in Ghana before the year-end.

“Our shareholders’ confidence has always been the cornerstone on which Zain has based all its decisions ever since the group launched its strategic profitable expansion strategy in 2003,” Al-Barrak said.

“All the group's financial indicators are now set to witness exponential growth on the back of Zain's huge investments in network infrastructure in many of the Middle East and African markets in which we operate. This capital increase will be instrumental in supporting our target of Zain becoming one of the top 10 global mobile telecom operators by 2011," he said.

Latest results showed that Zain, which is also eyeing a European listing, increased first-half revenues 26% to $3,5bn and profits went up 7% to $552m. Its active customer base rose from 32-million a year ago to 50,74-million.

Its CEO for Africa, Chris Gabriel, recently said the group would be interested “if an opportunity arises in SA”, which it would assess, including looking at the different types of licences being issued.

Zain is giving rivals, including MTN and Vodacom, a run for their money after recently extending its One Network scheme across Africa and the Middle East, eliminating high roaming fees for cross border calls.

Under its expansion, the target was to enter three more African countries within a year, and Gabriel confirmed he was assessing several opportunities. Some new deals were close to being signed, he said. The moves chiefly involve buying out existing players, though it would start greenfields operations if it won new licences in some countries.

Source:Business Day