Riyadh: Saudi Telecom Co. said on 26 June it had agreed an 11.4 billion riyal ($3.04 billion) deal that would give it a 25% stake in Maxis Communications, Malaysia’s biggest mobile operator.
Saudi Telecom, the largest Arab operator by market value, would take 51% of Maxis’s Indonesian operations, Saudi Telecom said in a statement to the Riyadh stock exchange.
The two operators would invest about $900 million in India to help Maxis expand operations in the world’s second most populous country, the statement said.
“This transaction represents an important step for the company’s drive to become an influential player in the global telecoms sector,” Saudi Telecom chairman Mohammed al-Jasser said in the statement.
It did not say exactly how much it would pay for the stake in Maxis.
The largest shareholder in Maxis is Malaysian firm Binariang, which is controlled by tycoon Ananda Krishnan. Krishnan has teamed up with other Maxis shareholders to buy the 41% of the company they do not own in a $4.7 billion bid that will be southeast Asia’s biggest ever buyout.
Analysts said the buyout was prompted by the huge capital demands of Maxis’s overseas expansion plan, which could run into resistance from other shareholders.
State-controlled Saudi Telecom is the only one of the five-largest Gulf Arab telecom operators that has not made foreign acquisitions, even after losing its mobile phone monopoly in 2005.
The company said in May it aimed to get 10% of its revenues from operations outside Saudi Arabia by 2010.
Saudi Telecom made its smallest quarterly profit in more than two years in the first quarter as competition eroded margins.
Rival Etihad Etisalat was able to capture 30 percent of the market within 18 months of starting operations in May 2005.
Competition in the largest Arab economy is set to intensify now that a consortium led by Kuwait’s Mobile Telecommunications Co. has won a third mobile licence.
Consortiums led by Bahrain Telecommunications Co., Hong Kong’s PCCW and US Verizon Communications won initial approval in April to operate Saudi Arabia’s new fixed-line phone network.