Zain has abandoned plans to acquire a majority stake in Palestinian operator Paltel. In a brief statement, the Kuwaiti-based operator noted only that it had pulled the plug on the deal because it “did not receive the required government approvals that were condition precedent to concluding the deal.” Further information will be communicated to shareholders in due course, the statement said. Announced in May, the original proposal intended for Zain to buy 56.5 percent of Paltel in a share swap. This would have given Paltel shareholders ownership of Zain’s wholly owned Jordanian subsidiary in return for Zain securing majority control in a combined entity. The merger of the Jordanian operations of Zain and Paltel was expected to create one business group with over US$1 billion in annual revenues. The deal was originally planned to be completed in June. 

The collapse of the deal is the latest setback for Zain, which earlier this month reported a 53 percent slump in net profit for the third quarter.  “This is another disappointment for Zain whose shares have slumped in recent weeks on the back of news that the deal to sell a controlling stake in Zain to an Indian led consortium appears to be falling apart over valuation,” said Credit Suisse in a research note.  According to Wireless Intelligence data, Paltel had just over 1.7 million mobile connections across the Palestine Territories (Gaza and the West Bank) by the end of the third quarter. A second Palestinian operator – Wataniya Mobile – launched this month.