STC in row with banks over restructuring of USD1.2bn loan

14 Aug 2013

Saudi Arabia’s leading telco Saudi Telecom Company (STC) is reportedly struggling to restructure a USD1.2 billion facility, as creditors including Deutsche Bank, HSBC and China Development Bank have refused to reduce the debt to reflect its recounted true value of between USD600-USD800 million. Reuters reports that the refusal has been reportedly attributed to potential losses of up to USD600 million for the lenders. According to the article, the initial Islamic loan was arranged in 2011 to fund the expansion of STC’s subsidiary PT Axis Telekom Indonesia (Axis Indonesia); however, since then the financial performance of Axis Indonesia has deteriorated and the creditors’ refusal to reduce the debt could complicate the potential sale of the Indonesian cellco, as STC needs lenders’ consent to offload the stake.

As previously reported by TeleGeography’s CommsUpdate, in July 2013 STC announced that it was entering into negotiations to sell its Indonesian unit as the subsidiary’s financial performance had been ‘poor’ and it failed to deliver the anticipated growth. Malaysia-based Axiata Group was said to be considering a bid for Axis Indonesia; with the takeover bid likely to be mounted through Axiata’s Indonesian unit XL Axiata, the country’s third largest cellco by subscribers.

Saudi Arabia, Saudi Telecom Company (stc), XL Axiata