Etisalat, UAE’s leading telecom firm, 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, which is 60-per cent owned by the UAE government, 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,' 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.'

Shares in Etisalat -- which is currently bidding for a 46-per cent stake in Kuwait's Zain valued at around $12 billion -- rose 7 per cent in 2010, outperforming Abu Dhabi's index which dropped 1.5 per cent.

The stock has gained 1.9 per cent so far this year. The shares closed 0.5 per cent higher on the Abu Dhabi bourse. – Reuters