STC to increase its stake in NTS

STC to gain full management control of NTS and plans major investment in Indonesia.

Tags: IndonesiaMergers and acquisitionsSaudi ArabiaSaudi Telecom Company
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STC to increase its stake in NTS STC is keen to expand its presence beyond its home market of Saudi Arabia.
By  Roger Field Published  March 14, 2011

Saudi Arabia's incumbent telecom operator, STC, is set to increase its stake in Indonesian operator, Natrindo Telepon Selular (NTS), to 80.1%, up from its current stake of 51%.

STC, which will gain full management control of NTS after the deal, will acquire the additional stake from Maxis Communications Berhad (MCB), its joint venture partner in NTS.

NTS, which runs GSM services in Indonesia under the Axis brand name, has some 10 million subscribers.

STC has also agreed to provide up to $371 million to NTS in the next two years. STC said it will also provide NTS with access to "external funding" in the coming five years.

Dr. Muhammad Bin Suliman Al-Jasser, chairman, STC, described Indonesia is an "important strategic market" and a "compelling growth opportunity".

While mobile market revenues in Indonesia have expanded broadly in line with nominal GDP growth of 16% (CAGR) since 2006, Al-Jasser believes that plenty of growth potential remains. "We believe that there is still significant potential to capture given the country's young demographic which comprises almost a third of the current population," he said.

After the deal, MCB's equity ownership in NTS will decrease from 44.0% to 14.9%. NTS' third investor, PT Harmersha Investindo (PTHI), will continue to hold 5%.

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