Subject to the acceptance of such a letter by the Zain board, the non-binding offer is conditional on several factors, which will be met before a binding offer is made. Shareholders of Zain Kuwait, Zain KSA and KHC will be informed of any further material developments on a timely basis, Kingdom Holding said in a statement on Tadawul website.

According to Reuters, Etisalat, the Gulf's second-biggest telecoms firm, bid $12 billion for a controlling 46 percent stake in Zain last September but wants the Zain Saudi stake sold to satisfy regulatory concerns because of its own operation in Saudi Arabia - Etihad Etisalat (Mobily).

A number of Gulf operators have been seen as potential bidders for the Zain Saudi stake. Low margins and high penetration rates in the region are forcing operators to look at potential acquisitions for growth.

But Kingdom's offer is the first formal bid.

Qatar Telecommunications said on Monday it was watching the Zain Saudi stake sale process closely.

"Qtel has a stated strategy of considering assets which fall under its existing lines of business and target geographies, as such, the company is monitoring the situation closely," a spokesman said, when asked whether Qtel would bid for the Zain Saudi stake.

Last Thursday mobile operator Bahrain Telecommunications' (Batelco) chief executive said he was still eyeing a stake and would make an offer at the right price. South African group MTN has also expressed an interest in Zain Saudi.

Zain Saudi's Chief Executive Saad Al-Barrak is also eyeing a management buyout of the stake, people familiar with the matter told Reuters.