Saudi Telecom Company (STC) has announced that it is entering into negotiations to sell its PT Axis Telekom Indonesia (Axis Indonesia) mobile subsidiary. STC owns a direct 80.100% shareholding in the cellco as well as an indirect 3.725% holding. The Arabian group first invested in Axis Indonesia in 2007 and in 2011, said the fast-growing Indonesian market would provide ‘a platform for future growth’. However, STC concedes that the subsidiary’s financial performance has been ‘poor’ and it has failed to deliver the anticipated growth in an intensely competitive wireless market contested by ten firms – five GSM and five CDMA.
As a result of the above, STC’s board yesterday authorised the Indonesian cellco’s board to begin talks with ‘the potential buyer, senior lenders and other creditors to reach an agreement’. STC group has reclassified its investment in Axis Indonesia as held-for-sale assets as at 30 June 2013. According to this classification, the group re-measured the net assets related to the investment at fair value and recognised a realised loss of SAR705 million (USD188 million).
In May this year TeleGeography’s CommsUpdate reported that Malaysia-based Axiata Group was said to be considering a bid for Axis Indonesia, according to unnamed sources who claimed to have knowledge of the matter. The three people, who wished to remain anonymous as the information is ‘private’, claimed that the takeover bid could be mounted through Axiata’s Indonesian unit PT XL Axiata, the country’s third largest cellco by subscribers. Acquiring number five player Axis Indonesia would give XL Axiata additional mobile frequencies while also hastening much needed consolidation in southeast Asia’s crowded wireless market, one source said.
Malaysia’s Maxis Communications also holds a minority 14.9% stake in Axis Indonesia, which TeleGeography notes has around 17.7 million mobile customers. Local shareholder PT Harmersha Investindo (PTHI) is understood to hold roughly 5.0% of Axis.