We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Wed 23 Jul 2008 02:24 PM

Font Size

- Aa +

Saudi Telecom seeks 25% stake in Omantel

Largest Arab telecom firm to make its second major venture outside the kingdom.

Saudi Telecom (STC) said on Wednesday it wants to buy the 25 percent stake Oman is selling in Oman Telecommunications Co (Omantel).

Shares of both operators jumped more than three percent after the largest Arab telecom firm by market value said it would seek to set foot in its second market outside of Saudi Arabia in the world's biggest oil-exporting region.

STC, which gave no further details in a statement on the bourse website, acquired a stake in Kuwait's third mobile phone licence last year as it faces greater competition at home, where mobile penetration hovers around 100 percent.

The government of Oman, which owns 70 percent of Omantel, kicked off the sale earlier this month, inviting investor interest in a deal it hopes will boost the state-controlled firm's competitiveness.

STC, which has lagged behind regional rivals such as Etisalat in its expansion drive, made its first foreign acquisition in June 2007 when it bought 25 percent of Malaysia's Maxis for $3 billion.

Later in the year, it spent about $937 million to buy a 26 percent stake in Kuwait's third mobile phone firm, while in February, STC snatched a 35 percent stake in Oger Telecom for $2.56 billion to gain access to Turkey and South Africa.

Oman said this month it would accept expressions of interest in the stake until July 18. Etisalat has said it would be interested in bidding for the stake.

In Oman, home to about 2.5 million people, mobile phone penetration of 96 percent last year was the lowest in the region, according to official estimates.

While STC's Kuwaiti operation has yet to start, the Oger and Maxis acquisitions have had a good impact on STC, which has been struggling since 2005 to fend off strong competition from Mobily, the kingdom's second mobile phone operator.

STC made its biggest ever quarterly profit in the second-quarter, beating analyst forecasts, after it started consolidating Oger Telecom. The stock rallied more than 6 percent on Monday after the earnings release a day earlier.

Both STC and Mobily - which holds about 40 percent Saudi market share - are bracing for more competition this year with the expected launch of a third operator, Zain.

Arabian Business: why we're going behind a paywall

For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.