• $1.2bn financing for STC’s mobile broadband unit in Indonesia

    $1.2bn financing for STC’s mobile broadband unit in Indonesia

    Joseph O'Halloran ©RapidTVNews | 26-05-2011

    Indonesia’s wireless broadband capability is to be extended – and with it high speed internet and mobile TV offering - after Axis, the Saudi Telecom Company (STC) owned operator, completed a US$1.2 billion network expansion financing deal.
    Comprising three facilities, the deal comprises $450 million from Murabaha underwritten by Deutsche Bank and Saudi British Bank; $400 million for equipment purchases from Huawei, underwritten by China Development Bank; and $350 million for equipment costs from Ericsson, arranged by HSBC and backed by the Swedish Export Credit Agency (EKN).

    Axis has also been offered a loan of $81 million by parent company STC, which earlier this year upped its stake in the Indonesian operator from 51% to 80.1%. STC says when required, it will also provide $290 million further financing to Axis as part of the latter’s five year plan.
    “The Indonesian telecom sector has witnessed sound growth over the past few years owing to the rising mobile and internet penetration rates,” said Ghassan Hasbani, chief executive officer, Saudi Telecom International Operations.

    “The growth of our international operations has had a major impact on the group’s overall revenues. This financing deal will enable Axis to increase its broadband services offering to customers thereby tapping into the tremendous growth potential that exists in a highly competitive market.”
    Indonesia has been experiencing strong economic growth with average annual GDP growth of 5% from 2000 until 2010.

    Erik Aas, chief executive officer of Axis, added: “”Indonesia’s telecom industry is fast-growing and extremely dynamic with mobile broadband usage constantly on the rise. Fifty per cent of Indonesia’s population is below 30 years old, and the whole population is adopting social networking applications on their mobile phones.
    “With this funding milestone in place, Axis is well set for its expansion into mobile broadband and improved coverage nationwide,” said Mr Aas. “This financing will fully support our expansion plans for the next few years, and we are well prepared to further grow our market share and revenues.”

    Axis, which started mobile operations in Indonesia in 2008, now claims to have 11 million subscribers to its 2G and 3G services, with network coverage of 80% of the population.