INDONESIA EXPANSION: Company to pay for Saudi Telecom's 95pc stake on cash- and debt-free basis
Axiata Group Bhd will buy Saudi Telecom's Indonesian unit for RM2.8 billion to boost its presence in the region's largest economy and hasten consolidation in the over-crowded telecommunications sector there.
Under the deal, PT XL Axiata Tbk (XL) will be acquiring Saudi Telecom Co (STC)'s 95 per cent stake in PT Axis Telekom Indonesia (Axis).
Axiata Group Bhd controls XL through its 66.5-per cent owned unit Axiata Investments (Indonesia) Sdn Bhd.
In a filing to Bursa Malaysia yesterday, the company said it had entered into a conditional sale and purchase agreement with STC and its unit, Teleglobal Investments BV, to buy Axis on a cash- and debt-free basis.
Axiata will pay US$100 (RM322) to STC and settle Axis' US$865 million debt.
The company said the move will address XL's current challenges with additional spectrum capacity, subject to regulatory approvals, leading to enhanced services and network experience on both 2G and 3G.
It will also boost asset utilisation, particularly on XL's towers and network equipment, with tangible cut in capital and operational expenditure spending.
Axiata president and group chief executive officer Datuk Seri Jamaludin Ibrahim said the purchase will also allow Axiata to have a much larger subscriber base of more than 65 million customers.
"This move will support a healthier telecommunications industry and, more importantly, enable XL to provide better network quality to customers at a much lower cost," he said.
Jamaluddin said the acquisition is in line with its strategy of investing in a country it operates in and will support in-market consolidation that benefits all parties.
"We are confident of executing the integration as we did with Hello and Smart in Cambodia and Suntel and Dialog in Sri Lanka," he said.
XL is one of the major cellular providers in Indonesia with 54 million subscribers.
Axiata's share price gained 10 sen to close at RM6.91 yesterday despite the benchmark index FTSE Bursa Malaysia KLCI falling 8.42 points to end at 1,784.06.
The deal supports the Indonesian government's push to consolidate its telecommunications industry, of which around nine operators still remain in a market with a penetration rate of 115 per cent at end-2012.