Saudi Telecom Co, the largest phone company in Saudi Arabia, bought 25 per cent of Malaysia’s biggest mobile-phone operator Maxis Communications Bhd to reach out to more subscribers.
Saudi Telecom paid 11.4 billion riyals ($3 billion) for the acquisition, its first major foreign purchase, the company said on Tuesday in a statement posted on the Saudi stock market Web site.
â€œThe deal will give the company access to a market of 1.4 billion people,” Mohammed al-Jisr, chairman of Saudi Telecom said in the statement.
â€œThe transaction will be financed through borrowing and self-financing,â€ the state-controlled company said.
Phone companies in Persian Gulf monarchies are expanding as domestic markets mature and demand increases.
Saudi Telecom competes with Etihad Etisalat in Saudi Arabia. A third mobile-phone company, Saudi Mobile Telecommunications Co, will enter the market next year.
“Saudi Telecom was looking at markets in the Middle East and Asia, and this purchase makes sense because both markets share the same culture, and Maxis services a huge population in Malaysia, India and soon Singapore,” said Kunal Bajaj, an analyst at HSBC in Dubai.
The transaction would value Maxis at about $12 billion. Maxis is controlled by T Ananda Krishnan, Malaysia’s second-richest man.
The billionaire needs to raise funds to finance his buyout of Maxis and to expand in Asia. Krishnan, through Binariang GSM Sdn, is spending about 16 billion ringgit ($4.6 billion) to buy 40 per cent of Maxis it doesn’t already own, taking full control of the company. Binariang made the buyout offer on May 3.
The Kuala Lumpur, Malaysia-based Binariang said that on May 28 it plans to spend as much as 15 billion ringgit to expand its network and coverage in Malaysia, India and Indonesia over the next three years.