Saudi Telecom Co, the largest phone company in Saudi Arabia, bought 25 per cent of Malaysia's biggest mobile-phone operator Maxis Communications Bhd to reach out to more subscribers. Saudi Telecom paid 11.4 billion riyals ($3 billion) for the acquisition, its first major foreign purchase, the company said on Tuesday in a statement posted on the Saudi stock market Web site. The deal will give the company access to a market of 1.4 billion people. “The transaction will be financed through borrowing and self-financing,” the state-controlled company said. Phone companies in Persian Gulf monarchies are expanding as domestic markets mature and demand increases. Saudi Telecom competes with Etihad Etisalat in Saudi Arabia. A third mobile-phone company, Saudi Mobile Telecommunications Co, will enter the market next year.
Saudi Telecom was looking at markets in the Middle East and Asia, and this purchase makes sense because both markets share the same culture, and Maxis services a huge population in Malaysia, India and soon Singapore. The transaction would value Maxis at about $12 billion. Maxis is controlled by T Ananda Krishnan, Malaysia's second-richest man.
I was thinking why the Indian companies are not aggressively moving into the South East Asian, Middle Eastern and African markets. They are rather agreesively fighting for the telecom space within India, in the process cutting each others margins heavily. The rates of telecom services in India are too low and the companies should start looking out of India, instead of chopping each others profits within India.
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