Mideast Carriers Look to Asia for Growth

The Middle East's liberalizing telecom market is a hive of activity as new networks spring up and carriers look to branch out abroad. A couple of deals this week saw those carriers strengthen ties with operators in the Asia/Pacific region.

Qatar Telecom QSC (Qtel) has formed a partnership with Singapore Technologies Telemedia Pte. Ltd. (ST Telemedia) to enter markets in the Asia/Pacific. As part of the agreement, Qtel shelled out $635 million in cash for a 25 percent stake in Asia Mobile Holdings, which controls ST Telemedia's stake in Singaporean carrier StarHub and Indonesia's PT Indosat Tbk . (See Qtel Invests in ST Telemedia.) Each is the second largest operator in its own country.

The deal reflects a shift in strategy for Qtel, whose status as a monopoly effectively ended in November when Qatar's government announced it would open the market to competition. The carrier is actively looking for growth opportunities abroad to offset losses to an impending second operator at home -- it's taken out a $2 billion credit facility to fund international expansion. (See Qtel Gets $2B Credit.)

In announcing the deal with ST Telemedia, Nasser Marafih, Qtel's CEO, said: "We believe that the Asia-Pacific is a high growth region and is one of the main areas we have targeted for our expansion."

In November, Qtel spent $28 million to acquire a 38.2 percent stake in NavLink GmbH , which provides managed data services to businesses in the Middle East and is part-owned by AT&T Inc. (NYSE: T). (See Qtel Takes NavLink Stake.)

Telekom Malaysia Bhd. , which has operations throughout Asia, is expanding into the region by hooking up with Etisalcom WLL in Bahrain to establish a dedicated MPLS link between the two countries. Etisalcom is investing $1.5 million in the link initially, and Telekom Malaysia plans to extend the route to other countries in Asia through its own network or partnerships with other carriers.

Zamzamzairani Mohd Isa, CEO of TM's Malaysia Business unit, said in a statement: "With the rapidly growing GCC [Gulf Cooperation Council] - South East Asia engagement, expansion into the region was a priority for us."

The carriers say the link will provide greater bandwidth for business customers in the Middle East and route traffic via less congested routes than those used by incumbents in the region.

Carriers are also getting busy within the Middle East to build out alternative networks. Integrated Telecom Co. (ITC) , Etihad Etisalat Co. (Mobily) , and Bayanat Al Oula for Network Services announced this week they have completed the first phase of a fiber optic network rollout in Saudi Arabia.

The $266.7 million Saudi National Fiber Network (SNFN) is being installed by Thales SA (Paris: TCFP.PA) and Cisco Systems Inc. (Nasdaq: CSCO), and will enable Mobily to offer fixed high-speed broadband and video services along with its mobile services. The network is expected to be completed in 2008 and will provide the carriers with a cheaper alternative to using incumbent Saudi Telecom Co. (STC) 's network.

Bayanat Al-Oula for Network Services is also involved in a mobile WiMax rollout, enlisting Samsung Corp. to deploy the network. The operator plans to launch commercial services in four cities this year, before expanding the network nationwide. (See Samsung Wins Saudi Deal.)

In Dubai, Oger Telecom is in the process of raising a $4.3 billion loan to finish paying early for a 55 percent stake in Türk Telekomunikasyon A.S. it acquired in 2005. (See JV Buys Turk Telecom Stake.) Oger paid 20 percent of the $6.56 billion sale price at the time, and agreed to pay the rest in equal installments over five years. CEO Paul Doany told Zawya Dow Jones that the company is finalizing the loan details and will sign an agreement in several weeks.

Oger postponed a planned $1.25 billion IPO in November "in the light of increasingly challenging and volatile regional market conditions," when stocks tanked across the Middle East. The company reserved the option to go public when the markets improved, although it's now in less of a rush to do so because an auction for the third mobile license in Saudi Arabia, which Oger has its eye on, no longer requires that bidders be public companies. Incidentally, the deadline for applying for that license has been extended from this week to February 24.

— Nicole Willing, Reporter, Light Reading

Be the first to post a comment regarding this story.
Sign In