• Agreement is the largest commercial Transaction in the Palestinian Territories
• Through share-swap transaction, Zain Group will hold 56.5% stake in Paltel with Paltel owning 100% of Zain Jordan
• Merger will generate over US$1 billion in annual revenues in 2009 with significant CAPEX and OPEX synergies
• Deal will take Zain’s commercial footprint to 24 countries, operation to join ‘One Network’

 Amman, May 18,  2009 – In an official signing ceremony held in Amman, Jordan, Mobile Telecommunications Company KSC (“Zain”) and Palestinian Telecommunications Company Plc (“Paltel”) have entered into an agreement for a share-for-share exchange, which will see Zain take a majority interest in Paltel with an equity shareholding of 56.53% in exchange for Paltel owning 100% of Zain Jordan. Paltel is a publicly-listed entity on the Palestinian Stock Exchange and Abu Dhabi Securities Exchange. The merger will set the current Paltel shareholders equity position in both Paltel and its newly acquired subsidiary, Zain Jordan at 41.43%.* (for more details of transaction, see notes below)
 
Through this transaction, Palestine will become the 24th territory in which Zain will have a commercial footprint. The mobile operation in Palestine currently known as ‘Jawwal’ will be rebranded to Zain by the end of 2009. This mobile operation will also join Zain’s renowned ‘One Network’** platform, taking to 19 the number of countries that benefit from One Network’s many advantageous roaming offerings.
 
The combination of both Zain Jordan and Paltel will produce a business group which will generate over US$1 billion of revenues, US$450m in EBITDA and US$300 million in net income in 2009 alone. Additionally it will result in significant synergies and efficiencies in CAPEX and OPEX spend and purchasing power, all of which will improve the profitability position of the group in line with Zain’s newly implemented ‘Drive11’ transformation program.

Paltel, with a base of 1.5 million mobile customers and over 363,000 fixed line customers, as well as approx 78,000 ADSL customers as of March 31, 2009, has, since its establishment, demonstrated strong growth, resilience and an enviable track record in fixed and mobile voice, data and value added services. Zain Jordan, with over 2.35 million active mobile customers, has pioneered award-winning voice, mobile broadband and data services in the Jordanian market. Working together, both operators will be in a position to bring innovative services with wide-market appeal to Jordanians and Palestinians alike, strengthening the already entrenched positions of both operators in their respective markets.

“This partnership with a foreign strategic operator such as Zain represents a strong endorsement of the Palestinian economy and its capital market. This development will restore investor confidence in Palestine and is a proof point that the telecom sector is still buoyant and growth oriented, It also marks a new chapter in our business operations as we prepare for the upcoming market liberalization in the mobile telecommunications sector in Palestine,” said Mr Sabih Al-Masri, Chairman of Paltel. “We are very pleased that we have now established a strong partnership with Zain, enabling us to leverage its unique products and services, and enjoy synergies with Zain’s operations in the areas of branding, joint procurement and purchasing power, human resources and more efficient access to debt and equity capital markets. With access to the One Network, mobile banking and other services, we will be in a position to enhance the customer offering and experience to millions of Palestinians both at home in the West Bank and Gaza and abroad in countries where Zain operates.”

“The agreement is a milestone for both the economies of Palestine and Jordan and heralds a new era in connectivity between Palestine and Jordan and the rest of the countries where Zain operates. The deal will put a new telecommunications player on the map creating sizeable facts and leverage points enjoying a combined customer base of 4 million subscribers, more than 500,000 fixed line subscribers, and 1 million internet subscribers.  The combined workforce will present a formidable human resource pool of talent of over 3,900 employees, said Dr. Abdul Malik Al Jaber, Vice Chairman of the Paltel Group.

“As for our customers and shareholders, the added value services and synergies will be felt immediately by the customer base in both Palestine and Jordan. Additionally and from a national perspective, we shall have overnight in the Palestine Stock Exchange a new company with a market capitalization above USD$ 3 billion, therefore raising the total value of the stock market of Palestine. Palestine shareholders will now own stocks in a regional entity spanning the economies of Jordan and Palestine”, added Dr. Al Jaber.

Under the framework of a strategic management agreement and branding/intellectual property agreement, Zain will bring its experience in managing international operations to Paltel, aligning the Paltel operations with Zain’s global ACE*** strategy, incorporating its unique value propositions such as One Network, mobile-banking services and Zain-Create, Zain’s new digital entertainment portal, and introducing initiatives to improve expense management and consolidate business operations to realize operational synergies.  In return, Zain will be able to leverage the extensive experience of the Paltel’s management and staff in managing an integrated telecommunications operator spanning fixed line, wireless, ISP services, call centre services and operations outsourcing.

The transaction will close in Q2, 2009 subject to the approvals of Telecommunications and Securities market regulators in applicable jurisdictions. Zain’s financial advisor was Global Investment House, whilst Paltel was advised by EFG Hermes.

• Strong corporate identity with direct involvement in the development of economic activity  towards nation building and community development in Palestine

Note to Editors
*The share-swap transaction involves an exchange of a total of 58.57% of Paltel’s shares for 100% of the shares of Pella Investment Company (“Pella”), the holding company of Jordan Mobile Telephone Services Company (“Zain Jordan”). Zain’s equity in Pella, at 96.516%, will be exchanged for 56.53% of Paltel’s equity whilst the balance of equity held by the other shareholder in Pella, 3.484%, will be exchanged for 2.04% of Paltel. Paltel will own 100% of the shares of Pella, and its underlying subsidiary, Zain Jordan.

** ‘One Network’ is the world’s first borderless mobile telecoms network service launched by Zain in September 2006. It currently offers over 500 million people in 18 countries preferential communications across geographical borders without roaming call surcharges and without having to pay to receive incoming calls, enjoying the benefits of being treated as a ‘local’ customer in these ‘One Network countries:  Bahrain, Burkina Faso, Chad, the Republic of Congo, the Democratic Republic of Congo, Gabon, Ghana, Iraq, Jordan, Kenya, Malawi, Niger, Nigeria, Sierra Leone, Saudi Arabia, Sudan, Tanzania and Uganda.

*** ACE Strategy: seeks to extract superior value from existing assets through three main thrusts: Accelerating the growth in Africa; Consolidating the existing assets; and Expanding into adjacent markets. Through implementation of the ACE strategy, Zain's new goals by the year 2011 are to attain:
• a US$ 6 Billion EBITDA
• exceed 150 million customers
• to become one of the top ten leading telecom companies in the world

About Zain
Zain is a leading emerging markets player in the field of telecommunications aiming to become one of the top ten mobile operators in the world by 2011. Today it is the 4th largest mobile network in the world in terms of geographic presence with commercial operations in 24 countries spread across the Middle East and Africa providing mobile voice and data services to 64.7 million active customers as at 31 March 2009.

Zain operates in the following countries: Bahrain, Burkina Faso, Chad, the Republic of the Congo, the Democratic Republic of the Congo, Gabon, Ghana, Iraq, Jordan, Kenya, Kuwait, Malawi, Madagascar, Niger, Nigeria, Saudi Arabia, Sierra Leone, Sudan, Tanzania, Uganda and Zambia. In Lebanon, the company manages the network on behalf of the government operating as mtc-touch. In Morocco, Zain in a joint venture owns 31% of Wana Telecom. On May 18, 2009, Zain entered into an agreement with Palestinian operator Paltel to attain a 56.5% stake in Paltel which serves 1.5 million mobile customers.

The company offers innovative services in its markets such as One Network, the world’s first borderless mobile telecommunication network enabling customers to receive calls and sms without charge and to make them at local rates throughout many countries in Africa and the Middle East.

The Zain brand is wholly owned by Mobile Telecommunications Company KSC, which is listed on the Kuwait Stock Exchange (Stock ticker: ZAIN). Zain is listed in the Financial Times’ Global 500 Index which ranks the world’s largest companies based on market capitalization (http://www.ft.com/reports/ft5002008). For more, please visit www.zain.com  or email info@zain.com

 

About Paltel
Palestinian Telecommunication Company PSC (“Paltel”) is an integrated telecom operator offering fixed, mobile, Internet and data services throughout The Palestinian Territories. Paltel is publicly listed on the Palestinian Stock Exchange (PSE) and the Abu Dhabi Securities Exchange (ADX). Paltel owns majority equity ownership in Paltel (fixed line operator), Jawwal (Mobile Operator), Reach (Call Centre services), Palmedia (Information and Media Services Provider), Hulul (Business Solutions Provider), Ayla (Consulting Services Provider), and Hadara (ISP Services). Paltel also owns equity in Vtel Holdings a Dubai-based multinational telecommunications company with interests in Middle East, Asia and Europe. As at 31st March 2009, Paltel had 1.5 million mobile customers, 363,000 fixed line customers and 78,000 ADSL customers. Paltel held an exclusivity position today in the Palestinian Territories; however a second licence has been awarded to Wataniya Telecom and competition is therefore anticipated in the next few months.  For more information, please visit  www.paltelgroup.ps