STC announced that it has entered into a definitive agreement with Maxis Communications Berhad (MCB) to restructure the terms of their joint investment in PT Natrindo Telepon Seluler (NTS) which operates in Indonesia under the Axis brand name, giving STC full management control.

As a result of the restructuring, STC’s equity ownership in NTS will increase from 51.0% to 80.1%. Correspondingly, MCB’s equity ownership will decrease from 44.0% to 14.9%.   PT Harmersha Investindo (PTHI) will continue to hold 5.0%.

Commenting on the restructuring, His Excellency, Dr. Muhammad Bin Suliman Al-Jasser, Chairman of STC, said: “Indonesia is an important strategic market for STC and one which offers a compelling growth opportunity.  Already mobile market revenues in Indonesia have expanded broadly in line with nominal GDP growth of 16% (CAGR) since 2006, but 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.”

Eng. Saud Al Daweesh, STC Group CEO said: “Increasing our ownership in this way will allow us to control and direct the destiny of the Axis brand within this dynamic telecommunications market, both strategically and operationally. Our deep experience and technological expertise will undoubtedly be valuable in such a rapidly developing market.”

Axis doubled its revenues in 2010 from the 2009 level and now boasts 10 million active subscribers.  In the next two years, STC has agreed to commit approximately USD 371 million to Axis as required by the business.   Additionally, STC will facilitate the provision of external funding in the coming five years to meet Axis funding requirements.

Indonesia is expected to become one of the world’s five largest economies by 2030.  It is the world’s fourth most populous country and the largest Islamic country by population number.  There are close links between Indonesia and Saudi Arabia with more than one million Indonesian expatriates living in the Kingdom.

The closing of the transaction remains subject to fulfilling local regulatory requirements, but this is expected to occur in April 2011.

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