Business | Telecoms
Saudi operator inks Indonesia deal
Islamic finance agreement will fund Axis' expansion and growth for next five years
- By Kevin Scott, Staff Reporter
- Published: 00:00 May 25, 2011
- Image Credit: Hadrian Hernandez/Gulf News
- Axis CEO Erik Aas and Ashok Aram, Mena CEO for Deutsche Bank AG Dubai, sign the deal as Gassan Hasbani, CEO of Saudi Telecom International Operations, and Ameen Al Shiddi, CEO of Saudi Telecom, look on.
Dubai: Saudi Telecom, the largest phone operator by market value in Saudi Arabia, said Tuesday its Indonesian subsidiary Axis had completed "one of the largest Islamic financing deals in Asia".
The agreement is designed to fund Axis' expansion and growth strategies for the next five years, Saudi Telecom's chief financial officer said in Dubai.
Axis says it has more than 11 million subscribers in more than 400 cities across Indonesia including in Java, Sumatra, Sulawesi and Bali.
The deal comprises of three facilities: a $450-million (Dh1.65 billion) commercial service, arranged by Deutsche Bank and HSBC and underwritten by Deutsche Bank and Saudi British Bank, a $400-million facility for equipment purchases from Huawei, underwritten by China Development Bank and a $350-million facility for equipment purchases from Ericsson, arranged by HSBC and backed by EKN, the Swedish Export Credit Agency.
Efficient operation
"This deal is one of the largest Islamic finance deals in Asia and one of the largest international financing deals in East Asia," said Ameen Al Shiddi, Saudi Telecom Company's CFO.
Saudi Telecom, Saudi Arabia's largest phone operator by market value, said on March 12 that it raised its stake in Axis to 80.1 per cent from 51 per cent
"Our revenue doubled in 2010 compared to the previous year," said Erik Aas, Axis' chief executive officer.
"However, we are placing less focus on revenues and market share. It is more important that we run an efficient operation and increase our user penetration.
"We have 4,007 towers in Indonesia at present but that will increase to nearly 15,000 over the next three years. We plan to lease most of the new towers to more than 30 partners as well as sharing the country's radio network," he added.
STC said in May it planned to invest around $450 million in its Indonesian operations, including the country's broadband wireless network. "We are grateful for the opportunity to work with STC and Axis on this landmark Islamic financing deal, said Rajiv Shukla, Head of Global Capital Financing at HSBC Saudi Arabia.
Strong example
"It stands as a strong example of HSBC's global strength and connectivity with STC in Saudi Arabia, Axis in Indonesia, and its financial partners in the deal spread across the globe," he added.
Saudi Telecom is also competing with Qatar Telecom for Syria's third mobile licence and plans to roll-out services in India within the next three years. The company's most recent acquisition was Bahrain's third mobile licence in 2009.
"There is great potential for growth in Indonesia's telecoms sector as it has a young, educated, tech-savvy population," said Gassan Hasbani, Saudi Telecom's chief executive officer.
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