Vodafone Group Plc (VOD) is nearing an agreement with Kuwait’s Mobile Telecommunications Co. (ZAIN), known as Zain, to expand access to networks across the Middle East, according to two people familiar with the matter.
The accord covers countries including Saudi Arabia, Iraq and Bahrain, and would let Vodafone, the world’s second-largest mobile-phone company, lower roaming fees and share handset- purchasing costs, the people said, declining to be identified because the talks are confidential. An announcement may be made as early as next week, one of the people said.
Vodafone is seeking to expand in countries where it has no existing presence with roaming deals and carrier agreements. The Newbury, England-based operator last year signed accords with at least 10 Asian carriers to lower roaming rates and give subscribers and enterprise customers better network coverage.
Vodafone is seeking to tap a market where wireless calling and data usage is soaring. Annual smartphone shipments in the Middle East and Africa are set to climb to 152 million devices, or 21.7 percent of the population, by 2015, from 36.7 million in 2011, according to Ovum, a London-based research firm.
Vodafone gained 0.2 percent to 184.5 pence at 11:09 a.m. London time. The stock had risen 2.9 percent this year through yesterday. Zain added 1.5 percent to 700 fils at the close in Kuwait yesterday, the last day of trading before the weekend. The shares have lost 22 percent this year compared with a 0.6 percent decrease for the benchmark Kuwait Stock Exchange Index.
Zain’s shareholders last year missed a second attempt to sell control of the company after Emirates Telecommunications Corp. (ETISALAT) abandoned a $12 billion offer for a majority holding. Zain sold most of its African assets in 2010 to Indian billionaire Sunil Mittal’s Bharti Airtel Ltd. (BHARTI)
Zain has operations across the Middle East and North Africa, while Vodafone’s presence in the region is limited to majority stakes in carriers in Qatar and Egypt. France Telecom SA (FTE), the biggest French phone company, has also sought to build a cluster of companies in the region, striking deals to enter Iraq and Morocco and boosting its stake in an Egyptian carrier.
Vodafone, which was pushed by investors at its annual shareholder meeting to consider further acquisitions, is always considering whether it makes best use of its size, Chairman Gerard Kleisterlee told investors in July. Vodafone previously looked at an unidentified carrier in Indonesia, he said.
Still, the company is increasingly relying on sharing and combining networks to lower costs after European regulators blocked takeover attempts including a combination of its Greek assets with a competitor. The company is sharing parts of its British network with Telefonica SA (TEF) and with Hutchison Whampoa Ltd. (13) in Ireland.
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