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"Saad Al Barrak has handed in his resignation to the chairman of the board and the chairman will present the resignation to board members to look into the matter," Zain said in a statement to Kuwait's bourse Web site, confirming a report by Dubai-based Al Arabiya television earlier Wednesday. The company didn't give a reason for his resignation. Mr. Barrak, who took the helm at the third-largest Arab telecommunications operator by market value in 2002, couldn't be reached for comment.
"His resignation will have a temporary negative impact on the company because he turned Zain into a global player and he has clearly left his mark on the company," said Naser Al Nafisi, general manager of Kuwait's Al Joman Center For Economic Consultancy.
Mr. Barrak led the company's aggressive acquisition spree, pushing for the purchase of Netherlands-based Celtel for $3.4 billion in 2005 to enter sub-Saharan Africa, as part of plans to turn Zain into a top-10 global mobile operator by 2011.
He negotiated for hefty licenses in countries such as Saudi Arabia, where Zain paid $6.1 billion to operate the third mobile company in the world's biggest oil exporter. Mr. Barrak will retain his position as chief executive officer of Zain Saudi Arabia, in which Zain holds a 25% stake, the Saudi company's chairman told Al Arabiya Wednesday.
Zain, which started as a telecom company in Kuwait in 1983, currently operates in 23 countries, serving more than 70 million customers.
Kuwait's Kharafi Group, which is leading a consortium to sell a 46% stake in the operator, said in January the sale may take more time to finalize due to the region's current economic and financial circumstances.
Badr Al Kharafi, vice-chairman of Kharafi Group, said in September a group of Indian and Malaysian investors plan to buy a 46% stake in Zain for about $13.7 billion and the deal would take about four months to conclude.
Mr. Kharafi said at the time the club of buyers included India's state-run telecom companies Bharat Sanchar Nigam Ltd., or BSNL, and Mahanagar Telephone Nigam Ltd., or MTNL, and Malaysian billionaire Syed Mokhtar Al Bukhary. But Bharat Sanchar Nigam Ltd. and Mahanagar Telephone Nigam Ltd. haven't confirmed their participation in the deal, further casting doubt about its viability.
The stake-sale talks put a hold on Zain's negotiations to sell its Africa assets, excluding Sudan and Morocco, and a strategic review the company was undertaking with consultants.
"I see the resignation as a result of the different agendas between the shareholders and the management. He wanted to continue to build and grow the company," said Simon Simonian, a telecom analyst at Shuaa Capital. "I think the major shareholder wanted to cash in and decided to sell Africa, but didn't get a good price. And then the major shareholder decided on his own to pursue the sale of a stake in the company," Mr. Simonian added.
Zain posted a worse-than-expected 53% drop in third-quarter net profit due to currency fluctuations and higher financing costs.
In Kuwait, Zain competes with National Mobile Telecommunications Co., or Wataniya Telecom, which is majority owned by state-controlled Qatar Telecom, and Kuwait Telecom Co., or Viva, in which Saudi Telecom Co has a stake.END