Qtel doubles stake in Kuwait’s Wataniya

In one of the biggest telecoms deals of the year so far, Qtel (Doha, Qatar) has raised its stake in Wataniya (Kuwait City, Kuwait) from 52.5% to 92.1% for a fee of 519.1 million Kuwaiti dinars ($1.85 billion), hoping to boost the performance of Kuwait’s number-two operator.

Qtel, which has emerged as a major regional player over the last few years, says that increasing its stake in Wataniya represents a major step forwards in its ongoing expansion strategy.

In one of the biggest telecoms deals of the year so far, Qtel (Doha, Qatar) has raised its stake in Wataniya (Kuwait City, Kuwait) from 52.5% to 92.1% for a fee of 519.1 million Kuwaiti dinars ($1.85 billion), hoping to boost the performance of Kuwait’s number-two operator.

Qtel, which has emerged as a major regional player over the last few years, says that increasing its stake in Wataniya represents a major step forwards in its ongoing expansion strategy.

The operator has already been on the takeover trail this year, agreeing in June to double its stake in Asiacell (Baghdad, Iraq), the second-biggest operator in Iraq, to 60% for $1.47 billion.

Qtel paid $3.8 billion for its initial 51% stake in Wataniya in 2007. The Kuwaiti company operates networks in Algeria, Tunisia, the Maldives, Saudi Arabia and the Palestinian Territories, besides its domestic market, and reported a net profit of $1.3 billion on revenues of $2.62 billion last year.

Nevertheless, the company has recently experienced difficulties. In July, it posted a 49% drop in second-quarter net profit to 19.1 million dinars.

One issue has been tougher competition in Kuwait, which still accounts for about 90% of Wataniya’s net profit, since the entry of Viva as a third player in 2008.

Owned by Saudi Telecom (Riyadh, Saudi Arabia), Viva has had the resources to mount an aggressive marketing campaign, winning customers from both number-one player Zain and Wataniya.

By increasing its stake, Qtel will be able to exercise more control over Wataniya’s strategic direction and aim to make up the lost ground, according to analysts.

Qtel has not said from which parties it bought its shares, but the Kuwait Investment Authority had agreed to sell its 23.5% stake, according to a Reuters report.