Saudi Telecom Company (STC) and Oger Telecom signed the final agreement for the purchase of a 35% interest in Oger Telecom for a net price of $2,56-billion. Oger owns 75% of Cell C.
The agreement was signed by Dr Muhammad Al Jasser, chairman of the board of Saudi Telecom and Mohammed Al Hariri, chairman of Oger Telecom.
Dr Al Jasser says: “This investment is consistent with our expansion strategy and it offers STC a simultaneous entry into two of the largest and most advanced emerging telecom markets.
"This transaction also marks another important milestone in STC’s development and will help us achieve our ambition to become the undisputed leader in the region.”
Oger Telecom owns a 55% stake in Türk Telekom, which, in turn, owns 81% of Avea. In addition to that, Oger Telecom also owns 75% of Cell C and 95% of Cyberia.
The transaction, which has been approved by the STC Board of Directors, remains subject to final agreement of legally binding documentation. Completion of the transaction will be subject to various approvals and customary conditions precedent.
Saud Al Daweesh, president of Saudi Telecom, comments: “We are very excited about this transaction which will accelerate our expansion into new growth markets and will provide long-term value to our shareholders as an integral part of our “forward” strategy.
"STC’s broad and in-depth experience in operating fixed-line and mobile networks in Saudi Arabia will bring significant value and support further development in Oger Telecom’s operations."
Oger Telecom is one of the largest telecom operators in the region with 2006 revenues reaching $6,9-billion on a proforma basis and a subscriber base of around 35-million. Turkey and South Africa have the largest telecom sectors in the Middle East and Africa respectively, driven by their large and relatively wealthy populations.
The Turkish fixed-line market is the largest in the region with approximately 19 million access lines controlled by Türk Telekom. In addition, the Turkish market has witnessed rapid growth in broadband penetration with DSL adoption reaching over 4.5 million subscribers, up from 250,000 subscribers at the end of 2004.
The mobile markets in Turkey and South Africa have also been exhibiting significant growth over the past two years, reaching compounded annual growth levels in subscribers of 19% and 17%, respectively. Rapid growth is expected to continue in the medium term, driven by further penetration and increased innovation and competitive activity in the markets.
Following this latest investment, STC will nearly double its reach to over 70 million subscribers, spanning its footprint over seven highly attractive telecom markets, namely:
Saudi Arabia, Turkey, South Africa, India, Malaysia, Indonesia and Kuwait. With this geographic presence, STC will be well positioned to serve pilgrims from the most populous Muslim countries as well as business visitors to Saudi Arabia.
Goldman Sachs International is acting as exclusive financial advisor to STC. Booz Allen Hamilton, Freshfields Bruckhaus Deringer and Deloitte also advised STC on this transaction