Saudi Telecom Company enters India
The company has entered the Indian telecom market with the purchase of 25% equity in Malaysian telecom giant Maxis Communications, reports M Rajendran.Updated: Jun 26, 2007 21:15 IST
The Saudi Telecom Company (“STC”) has entered the Indian telecom market with the purchase of 25 per cent equity in Malaysian telecom giant Maxis Communications, which in turn owns a controlling stake in the Indian telecom operator, Aircel.
Aircel operates in eight circles across the country, and has applied for a pan-India licence.
STC has invested $3.05 billion in Binariang GSM Sdn Bhd the principal shareholder of Maxis Communications, and in PT Natrindo Telepon Seluler ("NTS"), Maxis' subsidiary in Indonesia.
The Maxis Group has operations in Malaysia, Indonesia and India. Owned by T Ananda Krishnan, Maxis has a 74 per cent stake in Aircel, while the balance 26 per cent is held by the Reddy family, which also owns the Apollo Hospitals group.
Sri Rajan, partner Bain and Company, a leading strategic consultant told Hindustan Times, “Most major players looking to enter Indian market would adopt this route. It is the best way for them. While it might seem similar to the Egyptian telecom operator Orascom's acquisition of 19 per cent stake in Hong Kong-based Hutchison Telecom International (HTIL), the foreign investment board cannot question it till there is direct investment into India.”
A STC statement on Tuesday said that the investment includes participation in a $900 million subordinated loan, which will be underwritten equally by both STC and the existing shareholders of Binariang.
Dr Muhammad Bin Suliman Al-Jasser, chairman of STC, said, “We will expand our footprint to over 1.4 billion people in countries where Saudi Arabia has already significant historical and current trading and other relationships, and which include some of the fastest growing telecommunications markets in the world.”
STC will participate in the recapitalization and restructuring of Binariang, which, under the terms of the current take-private offer, will hold 100 per cent of Maxis. It will invest together with the other shareholders of Binariang to fund the rapidly expanding international operations of Maxis in India and Indonesia.
On completion of the agreement, STC will have a 25 per cent effective interest in Maxis and a 51 per cent direct stake in NTS.
Binariang chairman, Raja Datuk Arshad Raja Tun Uda said, “This partnership with STC provides the opportunity to link Maxis, and its operations in Malaysia, India and Indonesia, to one of the largest and most reputable telecommunications operators in the Middle East in a mutually beneficial way.”
First Published: Jun 26, 2007 21:01 IST