Saudi Telecom buys chunk of MaxisSaudi Telecom buys chunk of Maxis
June 26, 2007
It has emerged that Saudi Telecom is looking to buy into Malaysian market leader Maxis Communications. The Saudi operator’s plan is to acquire 25 per cent of Maxis, specifically by taking over a 51 per cent stake in its Indonesian operation for some SAR11.4bn ($3.04bn).
Maxis is apparently thirsty for capital to fund further overseas expansion, especially in India, where it’s looking for $900m for a major network roll out. At the same time, its biggest shareholder, Ananda Krishnan, is trying to buy out the other shareholders, which hold 41 per cent of the firm. That’s a $4.7bn buyout – the biggest in South-East Asian history – for starters.
Saudi Telecom, meanwhile, is the only one of the Gulf incumbent telcos that hasn’t invested abroad, even after its monopoly of mobile phone service was terminated in 2005. Ironically, its biggest competitor at home is another incumbent, Etisalat of the UAE.
Saudi Telecom’s profits fell to a two year low in the first quarter, after Etisalat’s Saudi operation rapidly grabbed 30 per cent of the market.
The pressure is now on, as Kuwaiti operator MTC has won a licence to start a third mobile network and Bahrain Telecoms, PCCW, and Verizon are in the process of starting up a rival fixed line network. Hence the dash to flash cash at Krishnan’s bash – he needs funds to expand and to pay the greenmail for his minority shareholders, and Saudi Telecom is under pressure to leap out of its box.