Vivendi halts talks with Zain

Acquisition talks have collapsed between Vivendi and Kuweiti telecommunications group Zain over a potential €7 billion stake in its African mobile operations.

Vivendi confirmed to the market that it was in discussions with Zain earlier in the month, but has made an abrupt decision to ‘interrupt talks.” The company had declared its interest in acquiring a majority stake in the Zain group’s telecommunications activities in Africa. “This acquisition would enable Vivendi to capitalize on its successful experience of developing mobile telephony in Africa,” the group said.

Yesterday however it made a brief statement to the market claiming that “it is interrupting talks, started some weeks ago, with the Kuweiti Group Zain, to acquire a majority stake in its African telecommunications activities. Vivendi has applied its usual criteria of profitability and financial discipline to this potential investment in emerging markets, in the best interests of its shareholders.”

It was believed  that  Vivendi was  looking at a stake of between 51% and 65% of the African business. That would include the mobile assets of 15 African countries, including Ghana, Nigeria and Uganda. The acquisition would have added to Vivendi’s existing presence in Africa via a 53% stake in Maroc Telecom.

Analysts claim that the about face was caused by potential pressure on Vivendi's credit rating. Standard & Poor's announced  earlier this month that it would consider placing the  triple-B rating for Vivendi on watch for a possible negative review if discussions with Zain advanced or became exclusive.
Meanwhile Zain Nigeria has announced it is expanding its existing fiber network with vendor Nokia Siemens Networks.  The vendor recently completed Phase 1 of the build out project, a 4000 km nationwide fiber backbone network, which was awarded in November 2007. Zain has chosen to extend its contract with Nokia Siemens Networks for Phase 2 which will extend the fiber optic backbone by another 600 km and will be delivered completely within a timeframe of six months.