With a long weekend ahead and many residents expecting to travel, we look at the current trends in the marketDecember 1, 2015 10:08
Saudi Telecom plans acquisition in 2012
Focus of acquisitions in Middle East; Broadband growth in double digit next year
October 24, 2011 6:39 by Reuters
Saudi Telecom Co (STC) plans major acquisitions in the Middle East next year to take advantage of a buyer’s market to expand it’s regional presence, the chief executive of its international operations said on Sunday.
“I see 2012 as a year of potential acquisitions. We are now in more acquisitions mode than before,” Ghassan Hasbani, chief executive of STC’s international division, told Reuters on the sidelines of a World Economic Forum conference.
STC was late to expand abroad compared with regional rivals such as the UAE’s Etisalat and Qatar Telecom , but now owns 80 percent of Indonesia’s Axis, 35 percent of Turkey’s Oger Telecom and a one-quarter stake in Malaysia’s Maxis Bhd .
“The market value of those assets is remarkably higher than the value that was paid for it three and a-half years ago. We have created a lot of value in the operations and assets through synergies,” Hasbani said.
STC also has mobile licenses in Kuwait and Bahrain.
The foreign push comes amid stiffening competition at home from rivals Mobily and Zain Saudi. STC said on Wednesday that third-quarter net profit more than halved, falling well short of forecasts as it made unexpected foreign exchange losses and took provisions following an adverse government ruling.
“We are not doing due diligence but we are analysing potential opportunities. Given market conditions and the global economic situation, it is a buyer’s market, no doubt,” he said.
“We are looking at opportunities that complement our current footprint and strengthens our investment portfolio and we are looking to focus on the Middle East region in markets where there is a good opportunity and a reasonable outlook on stability,” he said.
Financing would not pose a problem for the group.
“We have a lot of access to cheap funding and capital that would not be an impediment as long as we maintain a good level of rating and we maintain a good level of dividend payout,” Hasbani said. “We look at debt financing usually and that is available for a company like us at good rates.”
GROWTH DRIVEN BY BROADBAND
Hasbani said broadband and data services were driving double-digit demand in the Saudi market.
“We see the group expanding into the area of broadband. This is where the growth is coming from, mobile and fixed broadband on all fronts,” Hasbani added.
“In general in the telecom market in Saudi Arabia, we are seeing double-digit demand on data and capacity and in terms of utilisation of internet. This is going to be the main area of growth in the future,” said Hasbani.
Saudi Arabia’s mobile penetration ranks third in the world at 188 percent, according to the International Telecommunication Union, with the Kingdom’s conservative rules restricting mixing of the sexes and spurring demand for alternative ways to communicate.
Finnish handset maker Nokia says Saudi Arabia is in the top five countries globally for downloads, accounting for nearly one-in-four of these on its platforms in the Middle East and Africa.
The three Saudi operators are betting on data demand to offset slumping voice margins, analysts say.
The “mobile market is still experiencing some growth, sometimes it stops, it shrinks, but it is levelling off from a voice basic telephony perspective, but we are seeing growth coming from broadband and data internet usage which is phenomenal,” Hasbani said. (Reporting by Suleiman Al-Khalidi; Editing by Matt Driskill)