Telecom turns to local banks to finance purchase of 35% stake in Oger Telecom.
Saudi Telecom (STC) said on Tuesday it would borrow 9.6 billion riyals ($2.56 billion) from local banks to finance its purchase of a 35% stake in Oger Telecom.
"We are at a very advanced stage of talks to borrow 9.6 billion riyals to finance this deal," Chairman Mohammed Al-Jasser said in an interview on Al Arabiya Television.
The largest Arab telecoms firm by market value would take loans from local banks and could look at selling Islamic bonds in the future.
Al-Jasser is also deputy-governor of the kingdom's central bank which has been struggling to manage a surge in liquidity and inflation.
"Local banks are very competitive and they demand getting the lions' share so we will not seek other sources of financing," he said.
Standard & Poor's on Monday gave STC an A+ long-term foreign currency corporate credit rating, fifth from the top of investment grade.
Moody's Investors Service also assigned A1 long term local and foreign currency issuer ratings to the company.
"After the ratings, we will study the issue of sukuk to finance any company needs or refinance these loans when the market is ready," Al-Jasser said.
STC completed its purchase of Dubai-based Oger Telecom earlier this month for 9.6 billion riyals, gaining access to markets from Turkey to South Africa.
STC was looking to borrow at least 5.76 billion riyals to help finance the purchase, three bankers told newswire Reuters on Monday.