Deal gives Saudi firm access to lucrative markets
Saudi Telecom Co, the largest Arab telecom firm by market value, said it had agreed a $2.6 billion deal to buy 35 percent of Oger Telecom, gaining access to markets from Turkey to South Africa.
Oger, controlled by the family of late Lebanese prime minister Rafik al-Hariri, was in talks to sell a stake to French telecom group Vivendi after scrapping a public share sale. The talks ended without a deal, Vivendi said in November.
Gulf Arab telecom operators are expanding out of their home markets, where most have been riding a wave of economic growth spurred by a five-fold increase in oil prices since 2002.
Saudi Telecom lagged its regional rivals, making its first foreign acquisition only last year, when it bought 25 percent of Malaysia's Maxis in a $3 billion deal that gave it access to India and Indonesia, the world's second and fourth most populous countries.
"It was a natural step after the deal with Maxis, which opened the door to large Asian markets with big Muslim communities," said Saudi Telecom board member Abdul-Rahman Mazi.
"Oger Telecom is present in two of the largest markets in Middle East and Africa," he said of Oger's operations in Turkey and South Africa.
Oger Telecom operates in the two countries and Saudi Arabia, Lebanon and Jordan, providing fixed-line, mobile and internet services. Its parent, Saudi Oger, is a construction company controlled by Hariri's family.
Saudi Telecom secured a 26 percent stake in Kuwait's third mobile phone company with a $908 million bid in November in its second foreign venture.
The Kuwait business has yet to start operations, while Mazi said the Maxis networks in Indonesia and India were yet to make money.
"They are still making losses but the potential is tremendous," he said.
Saudi Oger has been looking to sell shares in its telecom business for more than a year.
Dubai-based Oger Telecom announced a $1.25 billion initial public offering in 2006 but cancelled it at the eleventh hour on fears that tumbling Gulf Arab markets would hit the share price after listing in Dubai and London.
Agencies
(China Daily 01/22/2008 page16)
