Oman Telecommunications (Omantel) is set to acquire 9.8 per cent of Kuwait-based Zain Group for $846 million, as part of a strategy to pursue “continued diversification”.

The Oman company will purchase 425.7 million of Zain’s treasury shares in a cash transaction, subject to regulatory approval, it said in a statement.

Martial Caratti, Omantel’s CFO, said the stake: “is a deliberate investment for Omantel as we position ourselves as a leading digital service provider. This is in line with our Corporate Strategy 3.0, launched in 2015.”

“We have always emphasised that growth will come from continued diversification, and this acquisition positions Omantel for the future,” he added.

Zain submitted a formal bid for Oman’s third mobile licence earlier this year. The government will decide on a shortlist by 14 August and the winning bid will be announced 4 September, Reuters said.

The Kuwaiti firm said the deal will strengthen its balance sheet and “provide significant liquidity. The proceeds will be used for general corporate purposes, including the potential prepayment of certain debt obligations.”

Bader Nasser Al-Kharafi, Zain Group CEO, the liquidity from the sale s will significantly enhance Zain’s strategic and financial flexibility “at a time where we continue to seek opportunities in the digital space and invest in upgrading our modern networks to enhance the mobile experience for our customers.”

Omantel said it will work with Zain on “core business functions”, including the wholesale telecom business, operations and networks and commercial activities, and believes the deal will help it diversify revenue sources and leverage Zain’s geographic footprint.

Zain operates in eight countries in the Middle East and Africa.

Oman is a tight market, with GSMA Intelligence estimates for Q1 2017 showing Omantel remained the country’s largest operator with 3.9 million connections, and Ooredoo an estimated 2.8 million.