Etisalat, the Gulf’s largest telecoms firm, saw its bid for Zain face a setback this week after Zain’s board rejected all bids for its Saudi affiliate, a key condition of the deal.

The Abu Dhabi-based operator, which says it will meet a February deadline to complete due diligence on Zain, said it would agree final terms with lenders for the three-part financing it wants by the end of this month.

Etisalat plans to raise $6 billion through an 18-month bridge loan, which it said will be repaid with a bond issue.

The company will raise a further $3 billion through a three-year loan and a five-year $3 billion loan. The five-year loan will also be repaid through bond sales.

In January, Etisalat, 60 percent owned by the UAE government, said it was “highly confident” of securing financing for the Zain deal and talks with 18 international and regional banks were continuing.

Etisalat established an $8 billion bond program in November made up of a $7 billion conventional component and a $1 billion Islamic bond, or sukuk, component, but has so far not announced any potential sales.

Meanwhile, Etisalat is in talks with the government to allow it to fall under commercial law, allowing for foreign ownership of its shares which it considers undervalued, a top official said on Thursday.

Chief Financial Officer Salem Al-Sharhan said Etisalat wants to transition to a company governed by commercial law and not the special law it was created and operates under.

“It (the stock) is under priced,” Al-Sharhan told reporters. “We are in discussions with the government but ultimately it is their decision. The restriction is coming from that we are established according to a special law.

“Once we move to commercial law ... then the government will decide how much they will allow foreign ownership.”