Etisalat Group and Zain Group’s Zain Sudan have signed a share purchase agreement (SPA) for the sale of Etisalat’s 92.3% stake in Canar (Sudan) for a cash consideration of AED349.6 million (KWD28.6 million, USD95.3 million). The transaction is subject to the approval of the Sudanese National Telecommunications Corporation and Sudanese competition authorities. Zain Group said the purchase will be financed through Zain Sudan’s own cash.   Our view: We currently value Canar at zero in our SOTP valuation for Etisalat; hence, if the deal is completed, it would add a minor AED0.04/share to our Etisalat fair value. We believe the transaction will have a negligible impact on Etisalat as the value represents a negligible 0.3% of our FV and 0.2% of the current market cap. Moreover, we estimate Canar’s contribution to Etisalat’s EBITDA to be less than 0.5%. Etisalat does not disclose Canar’s contribution to group EBITDA and net debt, making it difficult to calculate the implied multiple for the transaction. We see the transaction as positive for Etisalat as we consider it to be another step in optimising the company’s portfolio of international investments, which will eventually allow it to focus more on core operations (UAE, Maroc Telecom Group, Egypt, Pakistan and Nigeria). Additionally, we believe it was difficult for Etisalat to expand and create value in Sudan as Canar is solely a fixed-line operator with no exposure to the mobile segment.   For Zain Group, the deal accounts for 1.9% of its market cap. We see the transaction as beneficial for Zain as it will be able to combine Canar’s fixed-line capacity with Zain Sudan’s mobile operation, further solidifying its position in the Sudanese market as a leading integrated operator. Zain is currently the number one mobile operator in Sudan with a subscriber market share of 42% at the end of 2015. Furthermore, we consider Canar to be an important investment for Zain Sudan as it allows the company to reinvest its sizeable cash position as a hedge against further potential devaluation of the local currency (SDG). The SDG has been weakening since 2013 following the secession of South Sudan, and has been one of the key sources of FX losses for Zain Group over the past three years. (Omar Maher, Karim Riad, Company disclosure)