Shares in Kuwait's Zain have slumped to a 20-month low following the exit of its former chief executive and three failed attempts to sell stakes in the telecoms operator or an affiliate.
Zain's woes run from the shop floor to the boardroom, with the former monopoly losing market share in six out of seven markets, rival factions on the board embroiled in a legal dispute and two top executives departing since June.
Analysts say Zain has lost its way, shrinking from being a 23-country operator that claimed to be the fourth largest telecoms carrier globally to a regional operator more interested in paying out dividends than planning for the future.
Zain's shares are down 39 percent in 2011, ending Wednesday at KD0.93. Yet Zain remains profitable and some of its assets are coveted by rival Gulf operators. Below are some of the options open to Zain.
Zain's sale of its African assets for $9bn to India's Bharti Airtel funded two dividends totalling around KD1.59bn ($5.78bn).
Zain had about KD497m of net cash and free cash flow of KD272m by the end of 2010, according to an analyst's estimate, so it can continue paying generous dividends.
Further asset sales would boost payouts, but prioritising dividends over investment risks putting Zain at a disadvantage to competitors, with market share already under pressure.
The current owners or buyers could instead try to use Zain's cash for foreign acquisitions, analysts said, but there are few opportunities left in the Middle East, while competition from Saudi Telecom Co (STC), Qatar Telecommunications Co (Qtel) and the UAE's Etisalat would push asset prices up.
Focusing on improving performance could yield high payouts but first Zain must sort out the board, bed in the new heads of its Kuwait and Saudi Arabia operations and re-engage with minority shareholders miffed by an aborted sale to Etisalat.
The indebted Kharafi Group, which owns an estimated 26 percent of Zain and is thought to owe about $5bn to local banks, has been a divisive influence.
Kharafi needs cash, analysts say, and led two aborted attempts to band together with other shareholders and sell a controlling stake in Zain, most recently to Etisalat at KD1.7 per share.
The attempts ran into political and legal difficulties so this time Kharafi might instead opt to offload just its holdings. Since there would be no management control with the stake, it would likely command a lower premium.
A buyer would also have to contend with a board split by Kharafi's failed Etisalat deal. In September, a Kuwait court said a board meeting was invalid that ousted two Kharafi opponents and elected a family member.