Zain has reportedly agreed to sell its 25 percent stake in Zain Saudi Arabia, igniting speculation that Zain’s merger with Etisalat could be back on. According to sources at Bloomberg, a joint non-binding offer between Zain Saudi and a consortium comprising Bahrain operator Batelco and Kingdom Holding (a firm controlled by Saudi billionaire Prince Alwaleed bin Talal) is due to be agreed today, though there was no indication on the fee. Shares in all three firms rose after the offer was announced yesterday and official confirmation is expected as early as today (14 March). Zain rejected separate offers from Kingdom Holding and Batelco to buy the stake in its Saudi unit last month, reportedly on the grounds that the bids were too low. The new offer “makes sense because Batelco has the telecom experience and Prince Alwaleed is well connected by investors,” Al Mal Capital analyst Irfan Ellam told Bloomberg. “The question is: what price are they bidding?”

The sale of Zain’s Saudi stake was a key condition of Etisalat’s planned acquisition of a controlling (46 percent) stake in Zain Group, deemed necessary due to the UAE operator group already having a presence in Saudi via its Mobily arm. Etisalat had said Zain needed to sell its stake in the Saudi unit in a “timely fashion” for the deal to proceed, though Zain shareholders objected to what they saw as attempts to sell-off a prized asset on the cheap. Etisalat last month missed a second deadline to agree terms with Zain, prompting the Kharafi Group – Zain’s main shareholder and the driving force behind the deal – to withdraw its support. That appeared to spell the end for the merger, but the successful disposal of Zain’s Saudi arm could see the transaction back on. “If Zain Saudi is taken out of the equation then Etisalat’s offer can go ahead as the biggest stumbling block is Zain Saudi,” Ellam said.