Saudi Telecom to offload Indonesian unit

Saudi Telecom Company (STC) has entered talks with an as yet unnamed party with a view to selling its Indonesian asset – PT Axis Telekom. STC owns an 80.10 per cent shareholding directly and 3.725 per cent indirectly in Axis.

The Middle Eastern company invested in Axis in 2007 and in 2011, with a view to exploiting the potential in fast growing emerging and under penetrated markets. But despite significant operational and financial support as well as inter-group collaboration, the financial performance of the Indonesian company has been poor and it has not been able to deliver growth as expected due to intense competition in Indonesia, a market with more than ten operators.

STC said it has evaluated all alternatives related to the continuity of Axis and established that selling the company is one of the best alternative available for stakeholders.

In its recent second quarter earnings report, STC said “the operational performance of Axis, Indonesia…continued to drag the financial results of the Group.”

STC revenues for the first half of 2013 reached SR2.9bn (€586m), an increase of four per cent compared to the same period last year but EBITDA dropped six per cent year on year to SR 7.9bn.