Al-Khair National Stocks and Real Estate Co., a company owned by Kuwaiti conglomerate Kharafi Group, signed an agreement to begin due diligence for the deal with the Emirates Telecommunications Corp., or Etisalat, according to a statement posted on the Kuwait Stock Exchange.

"We have been informed by our client that an agreement was signed between Al-Khair ... and the Emirates Telecommunications Corp., and due diligence will begin in accordance with the rules and regulations of (Zain)," said the statement. The statement was issued by National Investment Co., which is representing Kharafi in the sale.

A deal with Zain would give Etisalat access to markets in Iraq, Morocco, Sudan and Jordan, among others. The deal was seen by analysts as a main vehicle for Etisalat to further expand, particularly into markets such as Iraq and Morocco where it has yet to secure a presence.

The Kuwaiti statement did not provide details on when the sale could be completed. But in a separate statement, Etisalat said the offer expires on Jan. 15 and it expects the due diligence process to take several weeks.

Etisalat announced in September it had submitted a preliminary conditional offer to buy 46 percent of Zain.

The Abu Dhabi-based telecommunications company said Wednesday the offer was "binding subject to a number of conditions" which include Zain's ability to sell its entire interest in its unit in Saudi Arabia, the receipt of all regulatory approval, the satisfactory completion of all due diligence and that "there be no material adverse change in Zain's business, financial or regulatory affairs." Etisalat said the deal was unlikely to close before the end of the first quarter of 2011.

"Matters are still at an early stage, and the information and data currently available to us are partial," Etisalat Chairman Mohammed Omran said, adding that the company's board would make a final decision once the due diligence was completed.

Zain's largest stakeholder is Kuwait's sovereign wealth fund. Kharafi Group, however, has been leading the efforts in the proposed deal. Etisalat is offering 1.7 Kuwaiti dinars ($6.06) per share.

Omran said Etisalat's "strategy is based upon sound and calculated foundations, one of the most important of which is expansion into regional and international growth markets which offer great opportunities to increase and diversify our sources of revenue." Zain has been seen as a prime target for an acquisition after it sold 14 of its Africa assets to India's Bharti Airtel in a deal valued at $10.7 billion.

Etisalat operates in a total of 18 countries across the Middle East, Asia and Africa, with over 100 million customers.