STC announces USD1.2bn financing for Axis Indonesia

26 May 2011

Saudi Telecom Company (STC) has completed a USD1.2 billion network expansion financing contract to expand and improve the wireless broadband capabilities of its Indonesian cellco Axis Indonesia. It is understood the financing deal, which will provide for the delivery of faster internet access and mobile TV, comprises three parts: a USD450 million loan from Islamic finance group Murabaha underwritten by Deutsche Bank and Saudi British Bank; USD400 million for equipment purchases from Huawei Technologies of China, underwritten by China Development Bank; and USD350 million for equipment costs from Ericsson, arranged by HSBC and backed by the Swedish Export Credit Agency (EKN). Further, Axis has been offered a USD81 million loan by STC, which upped its equity stake in the cellco from 51% to 80.1% earlier this year, and will also be provisioned with USD290 million in financing as part of Axis’ five-year plan.

Commenting on the investment plan, Ghassan Hasbani, chief executive officer of STC’s international operations, said: ‘The Indonesian telecom sector has witnessed sound growth over the past few years owing to the rising mobile and internet penetration rates … The growth of our international operations has had a major impact on the group’s overall revenues. This financing deal will enable Axis to increase its broadband services offering to customers thereby tapping into the tremendous growth potential that exists in a highly competitive market.’

Axis Indonesia, which launched mobile operations in 2008, now claims to have eleven million subscribers to its 2G and 3G networks, with coverage of 80% of the population.