STC shares hit eight-month high on unit sale deal

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Shares in Saudi Telecom Co (STC) surge to an eight-month high after the former monopoly agreed a deal to sell its Indonesian unit to a Malaysia's Axiata Group Bhd.

STC rose as much as 6.2 percent to its highest level since January, before giving back some of these gains to be up 2.8 percent at 0829 GMT.

The deal is for an undisclosed amount but may help STC end a tussle with global banks over a $1.2 billion loan tied to the Indonesian firm. It also allows the firm to exit a loss-making investment.

"STC has been reevaluating its international footprint for a while now, and this is a step in the right direction," said a Dubai-based research analyst.

"However, the majority of foreign exchange risk and volatility, which often results in currency losses, is generated from their stake in Turk Telekom, so the sale of Axis won't affect these significantly."

STC owns an indirect stake in Turk Telekom through its holding in Dubai-based Oger Telecom.

Axiata shares are up 0.4 percent on Kuala Lumpur's bourse.

Saudi Arabia's benchmark gains 0.2 percent to 8,020 points.

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