Zain: A Pro-AlBarrak Article from The National

The National has an article in favor of Dr. AlBarrak's stewardship.

The problem is not at Zain.  

The fundamental problem is simply that some of its Kuwaiti shareholders have characteristically overextended themselves and now need cash.  Typically what would have happened in the past is that  the "investor" would go to a "wise" local bank who would lend him additional money based on what might be charitably described as an optimistic collateral valuation.  No cash flow on the assets  of course but really good assets nonetheless.  Really good.  The Central Bank of Kuwait stopped this game of charades over a year ago by imposing additional lending restrictions.

So now all that's left to the "investor" is to raid his good investments to bolster other "wise" but less profitable investments or to repay maturing loans.  

And so value that was created in Zain will be destroyed.

What's a bit sad is that one (at least I this one) doesn't usually think of MAK Group as being a typical Kuwaiti "investor". 

That isn't to say of course that Dr. AlBarrak made all the right decisions at Zain or that Zain's strategy was necessary flawless.  But what does a telecoms company in a small market like Kuwait do to build value?

A couple of other things from the article:

1. An absolutely brilliant quote from Saad:  “There will be peace with Israel before there is an independent regulator in Kuwait,” he once said in a magazine interview.  Of course unlike the old joke about Gorbachev and God, he did not address when the regulator would be effective.
2. Another quote this time from The National:  "Kuwait’s practically unregulated stock market does not require investors to disclose their total holdings in a company, including shares controlled by related parties."  Another charitable comment.  There is precious little disclosure required on most topics.  A glance at the websites of listed companies in Kuwait would confirm this.  And for all those out there who advocate less regulation and allowing the market to police itself, there could be no more compelling example of "success" this approach will bring than the KSE.
3. And another:  "In the past decade, Vavasi has announced a number of multibillion-dollar projects, including a pan-Indian mobile network, an advanced silicon manufacturing facility and an aircraft manufacturing joint venture. None has materialised."   That this ever was taken seriously is a testatment to the truth of yesterday's post Stage #4.  In any case, later this week  we may be announcing Vavasi's participation in the US$1 billion build out of Suq Al Mal.  There will be exciting new features and an overall improvement in your experience here at the site.  And an even more dramatic improvement in Abu Arqala's lifestyle.  Or at least AA hopes so.  With this dramatic change in fortunes imagined, it may be time to submit that loan request to my favorite banker in Kuwait.  Well, actually no, I think Abu Shukry is liable to turn me down.  Luckily, there are "wise" lenders in Kuwait who may not.  And as demonstrated by my postings here, I can take either conventional or "Shari'ah" compliant financing.