Bahrain Telecommunications (Batelco) will likely complete its joint purchase of a quarter-stake in telecoms carrier Zain Saudi within eight weeks, the Bahraini firm's chief executive said on July 13.
Kuwait's Zain in March agreed to sell its holding in the affiliate to joint bidders Batelco and Saudi billionaire Prince Alwaleed bin Talal's Kingdom Holding for $950 million, with due diligence announced in June.
"The deal is progressing well and there are no show-stopping issues - we are addressing minor issues when they come up," Batelco Chief Executive Peter Kaliaropoulos told Reuters in a telephone interview.
"We expect it to be completed in eight weeks but whether its eight weeks, 10 weeks or seven weeks isn't critical. What's critical is making sure the company has the right working capital going forward."
Zain Saudi is expected to make a loss of 487.73 million riyals ($130 million) in the second-quarter, according to the average estimate of analysts polled by Reuters.
This would take the carrier's accumulated losses to more than 8.8 billion riyals, while its share capital totals 14 billion. Under Saudi market rules, a company's shares will be suspended if accumulated losses reach 75 percent.
To remedy this, Zain Saudi's board in February recommended cutting the company's share capital by more than half to 626.5 million shares with a nominal value of 10 riyals. This move would absorb most of the firm's losses and it plans to then issue 438 million new shares.
"Right now, Zain Saudi is still at least two years away from profitability and new management must try to shorten that time frame as well as trying to keep with up capital expenditure requirements to compete with the other operators," said Asim Bukhtiar, Riyad Capital head of research in Riyadh. "They will have to inject more funding into the company."