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Wednesday, 23 January 2008 |
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Saudi Telecom to disburse US$2.56bn to acquire a 35% stake in Dubai-based Oger Telecom. It's amazing what money can do.
In a move reminiscent of the sort of strategy pursued with mixed success by European PTOs in the 1990s, Saudi Telecom Company (STC) is to pay upwards of US$2.5bn in order to secure a 35% stake in Oger Telecom. The move is being interpreted as a response by STC to increased levels of competition in Saudi Arabia’s domestic telecom market.
The main ICT assets of Oger Telecom, owned by the Saudi Oger group founded by the late Lebanese PM Rafiq Hariri and still dominated by Hariri family members, are a 55% stake in Türk Telekom of Turkey, 75% of South Africa’s number three cellular operator ‘Cell C’, and a regional ISP known as ‘Cyberia’.
State-owned Saudi Telecom has non-Saudi assets in India, Indonesia and Malaysia and has earned an enviable reputation for its commitment to freedom of information and speech. It also has a history of introducing gold-plated networks into the Kingdom. Many suppliers work overtime to win these lucrative network contracts.
According to Mohammed Hariri, Chairman of Oger Telecom and Senior Vice President of Saudi Oger: “Saudi Oger has made great strides in its telecom activities since its initial investment in Cell C and subsequent acquisition of a controlling interest in Türk Telekom. This transaction represents a major step in the development of Oger Telecom and confirms the benefits of Saudi Oger’s telecoms strategy. We welcome STC as a shareholder”.
It is now expected that STC will use Oger Telecom as a further springboard for international expansion. A combined market valuation of the pair would exceed US$50bn – or more than most European telcos.
Jim Chalmers
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