RPT-UPDATE 1-Saudi Telecom to buy Malaysia's Maxis-sources

(Repeats story first sent on Monday, without changes)

RIYADH, June 25 (Reuters) - Saudi Telecom Co. 7010.SE, the largest Arab telecom firm by market value, has agreed to buy a majority stake in Maxis Communications MXSC.KL, Malaysia's biggest mobile operator, sources familiar with the matter said on Monday.

Saudi Telecom, which is bracing for the end of its fixed line monopoly this year, will announce the deal on Tuesday, the sources told Reuters in Riyadh. Neither could say how much the government-controlled company had agreed to pay.

A 51 percent stake in Maxis would be worth about $5.7 billion at the stock’s last traded price.

“They have reached a deal with the largest shareholder in the Malaysian company,” one source said.

Saudi Telecom’s spokesman Qusai al-Fawaz declined to comment when contacted by Reuters.

Malaysian firm Binariang, controlled by tycoon Ananda Krishnan, is the largest shareholder of Maxis. Krishnan has teamed up with other Maxis shareholders to buy the 41 percent of the company they do not own in a $4.7 billion bid that will be Southeast Asia’s biggest ever buyout.

Analysts said the buyout was prompted by the huge capital demands of Maxis’ overseas expansion plan, which could run into resistance from other shareholders.

Maxis is banking on its Indian and Indonesian units for subscriber growth as its Malaysian operations ramp up data services like high-speed broadband to counter intensifying competition and a mature mobile market.

The cost of building businesses in the big emerging markets of India and Indonesia, with combined populations of about 1.4 billion people, has unnerved some minority investors. Krishnan wanted to accelerate the firm’s expansion.

State-controlled Saudi Telecom is the only one of the five-largest Gulf Arab telecom operators that has not made foreign acquisitions, even after losing its mobile-phone monopoly in the world’s biggest oil exporter in 2005.

The company said in May it aimed to get 10 percent of its revenues from operations outside Saudi Arabia by 2010.

Saudi Telecom made its smallest quarterly profit in more than two years in the first quarter as competition eroded margins.

Rival Etihad Etisalat 7020.SE was able to capture 30 percent of the market within 18 months of starting operations in May 2005.

Competition for mobiles in the largest Arab economy is set to intensify now that a consortium led by Kuwait's Mobile Telecommunications Co. TELE.KW has won a third mobile licence.

The government has said it will sell a second fixed-line licence this year.

((Gulf newsroom +971 4 391 8301;; editing by Gary Hill)) Keywords: SAUDITELECOM MAXIS/

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