Saudi Telecom said to mull options for indirect Maxis stake

KUALA LUMPUR (BLOOMBERG) - Saudi Telecom is exploring options for its indirect stake in billionaire T. Ananda Krishnan's Maxis, the second-largest Malaysian wireless carrier by market value, people with knowledge of the matter said.

The Gulf kingdom's biggest telecommunications operator is gauging interest in its 25 per cent holding in Binariang GSM, which is the controlling shareholder of Maxis, according to the people. The Riyadh-based company may consider selling the stake to a Malaysian pension fund or another financial investor, two of the people said, asking not to be identified because the information is private. 

The Binariang holding gives Saudi Telecom an effective 16.2 per cent interest in Maxis valued at about US$1.8 billion (S$2.46 billion), data compiled by Bloomberg show. 

Binariang also owns a majority stake in Indian wireless carrier Aircel, which is merging with larger rival Reliance Communications. 

Saudi Telecom hasn't started a formal auction process for its Binariang stake and could decide to keep it, according to the people. Maxis gained 2.2 per cent, the most in about two months, to 6.15 ringgit (S$2.03) at the close Monday in Kuala Lumpur, after earlier rising as much as 3.3 per cent. Saudi Telecom fell 2 per cent to 55.25 riyals (S$20.12) at 3:51 pm. in Riyadh, headed for the lowest close since December 2013.

"The market believes that the entrance of a new partner may be good for Maxis," Danny Wong Teck Meng, chief executive officer at Areca Capital, said by phone Monday.

Saudi Telecom joined Middle Eastern operators including Ooredoo QSC and Emirates Telecommunications Group that plowed more than US$10 billion into a wave of Asian acquisitions from 2005 to 2010, data compiled by Bloomberg show. Ooredoo is now considering divesting its indirect holding in Singapore's StarHub, people familiar with the matter said earlier.

"Over the past few years these small stakes in foreign markets have not really been contributing to the bottom line," Nishit Lakhotia, head of research at Securities & Investment, said Monday by phone. "It makes sense for them exit operations like Binariang where it doesn't have management control to focus on other countries where it does have control and return the proceeds of any sale to investors, or put back into the business."

A representative for Saudi Telecom declined to comment. A spokesman for Maxis didn't immediately respond to an e-mail and phone call seeking comment.

Saudi Telecom said in July it's working with domestic competitor Etihad Etisalat Co. to explore options for their tower networks. The two companies aim to enhance value from their infrastructure assets by reducing capital and operational spending on the towers, they said at the time.

Mr Krishnan is Malaysia's fourth-richest person, with a net worth of $5.5 billion, according to the Bloomberg Billionaires Index.