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Zain Saudi CEO Al Barrak quits Kharafi joins board  Join our daily free Newsletter

MENAFN - Arab Times - 12/10/2011

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(MENAFN - Arab Times) Saad al-Barrak has resigned as telecoms operator Zain Saudi's chief executive to be replaced by a US-educated veteran from its parent Zain, two weeks after a consortium withdrew plans to buy a 25 percent stake in the Saudi unit.

Khalid Al-Omar, CEO of Zain's operations in Kuwait, will also take over as chief executive and managing director of Zain Saudi with immediate effect, the company said in a statement to the Saudi bourse.

Badr al-Kharafi, a member of the Kharafi family that is a major shareholder in Kuwait-based parent Zain , has also been appointed to the board of the Saudi unit.

"Relations between the Kharafi family and Barrak haven't been good for the past few years," said Nadine Ghobrial, EFG-Hermes telecoms analyst.

Barrak, who was formerly CEO of the wider Zain group, was the architect of Zain's acquisition spree which was put into reverse in recent years as the Kharafi family sought to cash in those assets.

Bahrain Telecommunications Co and Kingdom Holding withdrew a joint 950 million bid for the 25-percent stake owned by Kuwait's Zain in late September, more than six months after initial terms were agreed, while Barrak also tried to put together his own consortium to buy out Zain and allow him to remain in charge.

This protracted deal stalled Zain Saudi's capital restructuring plan to accommodate about 2.3 billion in accumulated losses, while its debts top 5.5 billion according to first-quarter results.

Zain Saudi had 16 percent of the Saudi mobile market last year, down from 18 percent in 2009 in terms of subscribers, leaving it a distant third to Mobily and Saudi Telecom Co.

"The balance sheet is over-stretched and the operator had not been able to significantly improve operational performance in the face of aggressive competition in the market." said EFG's Ghobrial. "Its situation will not improve until it completes its capital restructuring.

"I see a repeat of what happened when Barrak resigned as Zain group CEO- Zain went through a period of lack of focus and unclear strategy for more than one year."

Zain has gone from having operations in 23 countries in 2009 to a seven-licence carrier, selling its African operations to India's Bharti Airtel for 9 billion in 2010.

The indebted Kharafi Group was the driver of this change in strategy, with Zain paying out about 1.59 billion dinars (5.78 billion) in dividends in the past 18 months.


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