Saudi Telecom Company (STC) and Oger Telecom have signed the final agreement concluding STC's purchase of a 35% interest in Oger Telecom. The stake was sold for a net price of $2.56 billion.
The agreement was signed by HE Dr Muhammad Al Jasser, chairman of the board of Saudi Telecom, and Mohammed Al Hariri, chairman of Oger Telecom.
Said Al Jasser: "This investment is consistent with our expansion strategy and it offers STC a simultaneous entry into two of the largest and most advanced emerging telecom markets. This transaction also marks another important milestone in STC's development and will help us achieve our ambition to become the undisputed leader in the region."
Oger Telecom owns a 55% stake in T"urk Telekom, which, in turn, owns 81% of Avea. In addition, Oger Telecom owns 75% of Cell C and 95% of Cyberia.
Oger Telecom recently made a bid to acquire Telkom, while MTN has apparently also resumed talks on the matter. MTN was one of the bidders, in 2004, for Saudi Arabia's second mobile telephone licence, which would have placed it in direct competition with STC had it won. STC had a monopoly in the market at the time. The licence was ultimately awarded to a consortium led by the UAE's Etisalat.
Significant market growth
The transaction, which has been approved by the STC board of directors, remains subject to final agreement of legally binding documentation. Completion of the transaction will be subject to various approvals and customary conditions precedent.
Said Saud Al Daweesh, president of Saudi Telecom: "We are very excited about this transaction which will accelerate our expansion into new growth markets and will provide long-term value to our shareholders as an integral part of our forward-strategy. STC's broad and in-depth experience in operating fixed-line and mobile networks in Saudi Arabia will bring significant value and support further development in Oger Telecom's operations."
Oger Telecom is one of the largest telecom operators in the region, with 2006 revenue reaching $6.9 billion on a pro forma basis and a subscriber base of around 35 million. Turkey and SA have the largest telecom sectors in the Middle East and Africa respectively, driven by their large and relatively wealthy populations.
The mobile markets in Turkey and SA have also been exhibiting significant growth over the past two years, reaching compound annual growth levels in subscribers of 19% and 17%, respectively. Rapid growth is expected to continue in the medium-term, driven by further penetration and increased innovation and competitive activity in the markets.
Following this latest investment, STC will nearly double its reach to more than 70 million subscribers, spanning its footprint over seven attractive telecom markets, namely Saudi Arabia, Turkey, SA, India, Malaysia, Indonesia and Kuwait.
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