Saudi Telecom to take quarter of Maxis

Saudi Telecom is to buy 25 per cent of Maxis, Malaysia’s biggest mobile operator, in a $3bn deal that represents one of the biggest foreign investments in the south-east Asian country.

The investment will help finance efforts by Ananda Krishnan, Maxis’s main shareholder, to take the mobile operator private and will lead to joint plans by Saudi Telecom and Maxis to expand in India and the Middle East.

Saudi Telecom’s bid values Maxis at $12bn just weeks after Mr Krishnan launched a M$16bn (US$4.6bn) buy-out offer for the 41 per cent of Maxis that his group, Binariang, and associates did not own. Saudi Telecom will make the investment in Maxis through Binariang.

Saud al-Daweesh, Saudi Telecom president, told the Financial Times that the company’s first international acquisition was in line with its strategy of expansion into regions with close ties to Saudi Arabia: the Middle East, Africa and South Asia.

This deal, he said, would encourage international and roaming traffic with India, Malaysia and Indonesia; countries that contribute a significant number of Saudi Arabia’s 5m expatriates.

Saudi Telecom is facing competition at home from Ettihad Etisalat and Kuwait’s Mobile Telecommunications will begin operations in the kingdom next year.

Malaysia is seen as a mature mobile market and Mr Krishnan wants Maxis to tap fast-growing markets such as India. But he wants to take Maxis private because of concerns that minority shareholders might protest at the estimated M$15bn cost of the strategy.

State-owned Saudi Telecom said it would invest in the overseas growth of Maxis once the stake acquisition was completed. This will include helping underwrite a $900m loan to expand in India, where Maxis operates through its Aircel unit.

As part of the deal, Saudi Telecom will take a 51 per cent stake in Maxis’s troubled Indonesian business, Natrindo, which has suffered from competition and gaps in its network coverage.

The company will pay half of the $3bn deal in cash; the rest coming from shariah-compliant financing, he said.

Maxis has lagged behind state-owned regional rivals Singapore Telecom and Telekom Malaysia in expanding in southeast and south Asia.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.