Saudi Telecom, the leading Middle East telecommunications group, has agreed to pay $2.6bn for a 35 per cent stake in Oger Telecom, a mobile phone operator in emerging markets.
It is the second significant acquisition by Saudi Telecom outside Saudi Arabia in less than a year. Last June, it agreed to buy a 25 per cent stake in Maxis, Malaysias largest mobile operator.
People familiar with Saudi Telecom played down any imminent prospect of it seeking control of Oger Telecom or Maxis, but added that the group might be interested in the future if opportunities arose.
Other Middle Eastern telecoms companies such as Etisalat and Zain have been expanding beyond their home countries in recent years.
Saudi Telecom is a late addition to this activity and has been spurred into deals overseas partly because of increasing competition in Saudi Arabia.
Saudi Telecom, which is government controlled, is paying $2.6bn in cash for its Oger Telecom stake in a deal that gives the company an equity value of $8.1bn.
The money will go to Ogers existing shareholders, which are led by Saudi Oger, the Saudi conglomerate founded by Rafiq Hariri, the late Lebanese prime minister. Those shareholders will receive a further $833m from Oger Telecom in a move that will increase its net debt.
The largest investor in Oger Telecom will continue to be Saudi Oger, with a stake of more than 50 per cent, followed by Saudi Telecom.
In 2006, following falls on Middle East stock markets, Oger Telecom abandoned plans for an initial public offering in Dubai and London that would have given existing shareholders more than $1bn.
Last November, Vivendi, the French conglomerate, ended talks with Saudi Oger about buying a minority stake in Oger Telecom, partly because of disagreement on the companys value, said people familiar with the situation.
Oger Telecoms main asset is a 55 per cent stake in Turk Telekom, Turkeys leading fixed-line phone company. It also controls Cell C, South Africas third-largest mobile operator.
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