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Money News

INTERVIEW - Saudi Telecom eyes steady overseas expansion

AMMAN (Reuters) - Saudi Telecom (STC) is looking to build on its international expansion with deals that will bring operational synergies and value for money.

“We are on a trail of rational expansion, but we are not looking just for financial investments but assets that make operational sense in South Asia, Middle East and North Africa,” said Ghassan Hasbani, Chief Executive of STC’s International division.

“This is where our current footprints exist today and where there are potential markets that would complement our current footprint,” he told Reuters in an interview.

Hasbani’s division manages in excess of $7 billion worth of foreign assets acquired by STC in the last three years.

Like other Gulf telecom operators, STC, the Arab world’s largest telecom company by market value with over 100 million subscribers calculated on a consolidated group basis, has expanded overseas after losing its monopoly at home.

In 2007, it spent $3 billion to take a 25 percent stake in Maxis, Malaysia’s biggest mobile operator, in a deal that opened markets in Malaysia, Indonesia and India.

STC paid about $3.5 billion in 2008 for a 35 percent stake in Oger Telecom which controls Turk Telecom and a 26 percent stake in Kuwait’s third mobile phone licence.

“STC only started investing about three years ago so we are in growth investments mode. STC is moving into the second stage of its internationalisation,” Hasbani said.

In South Asia, STC eyed growth opportunities in India, where it already has a presence through its stake in Maxis, which owns a majority stake of Chennai-based Aircel, Hasbani said.

“We are already in the Indian market, there are major investments that will go into India. India is a growing market. There is a very large youthful population that is coming into the telecoms sector now,” Hasbani said.

But Indian investment would depend on how the market developed following Aircel’s recent acquisition of third generation (3G) and broadband access licences.

“Before that clarity is in place, it is difficult to think beyond continuing to grow our current investments in India and continuing to invest in infrastructure and services in that market through Aircel,” he added.

Hasbani said STC expected the contribution to revenues of overseas operations to grow beyond the current 30 percent in the next three years, driven by favourable demographics and expansion of data and broadband services.

Editing by David Cowell

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