BSNL, MTNL say ‘wrong number’ to Kuwait’s Zain

NEW DELHI: What began in Kuwait overnight Tuesday as the biggest telecom deal in West Asia this year appeared to be unravelling by Wednesday evening in New Delhi, with state-run BSNL and MTNL ��� purportedly the main players in an ���Indo-Malaysian��� consortium set to buy a 46% stake in Kuwait���s Zain for $13.7 billion ��� refusing to be linked to any such grouping.

The drama began in Kuwait when Bard al-Khorafi, whose Khorafi Group holds 20% in Kuwait���s largest phone company, announced at a news conference that they, along with other shareholders, were selling 46% of Zain to a consortium made of Malaysia���s al-Bukhari Group, BSNL, MTNL and a little-known Indian group called Vavasi.

In a statement to Kuwait stock exchange, a Khorafi-controlled company National Investments said BSNL and MTNL were part of a consortium that would pay 2 Kuwaiti dinars a share for the stake in Zain, West Asia���s third-largest telecom operator.

However, BSNL flatly denied being part of any such grouping, only saying ���some parties��� had approached it to join a buyers��� consortium. ���Just because we gave certain people a hearing, our names cannot be used by them, and we cannot be linked to any consortium,��� a top BSNL executive, who asked not to be named, told ET.

The executive said while BSNL was interested in Zain���s African operations, it would only partner MTNL and not a private player when bidding for assets overseas. ���We have not even sought DoT���s approval for entering into talks with any player,��� he said.

Earlier, Vavasi MD Farid Arifuddin had said in Kuwait that there was a good fit between Zain and Indian companies in the consortium. ���What we bring to the transaction is our experience, especially our prospective partners from India. They have the experience of operating in low-cost countries,��� he said.

But by evening, Mr Arifuddin toned down his comments, saying Vavasi had only initial discussions with BSNL and MTNL, regarding the consortium. ���I had not said the Indian telecom companies were part of the consortium,��� he told ET, putting question marks on any such deal, which curiously is yet to be confirmed by Zain���s top management. ���This (funding) cannot fall in place overnight for a deal of this size. It will take around three months time,��� Mr Arifuddin said, adding that his group would seek other partners if the state-run firms were reluctant.

The news from Kuwait caught both BSNL and MTNL offguard. MTNL shares closed nearly 1% lower at Rs 93.60. Later in the day, BSNL and MTNL issued a joint statement saying they had taken no view ���regarding participation in the said consortium as reported���. The two firms, however, said they were always on the lookout ���to explore all types of overseas business opportunities to expand their operations.���

Top DoT officials also weighed in, saying while Zain shareholders had approached the firms for a stake sale, the government was not aware of BSNL & MTNL being part of any consortium.