Saudi Telecom is to buy 25 percent of Malaysia's Maxis in a $3 billion deal that gives the Arab world's top telecom operator access to Indonesia and India, and marks southeast Asia's biggest buyout.
Saudi Telecom Co., battling growing competition in its home market, said it would buy the stake by investing in Malaysian tycoon Ananda Krishnan's firm Binariang, Maxis Communications' largest shareholder.
Krishnan has teamed up with other Maxis shareholders to buy the 41 percent of Maxis they do not own in a $4.7 billion bid that will be southeast Asia's biggest buyout.
Analysts have said the deal was prompted by the huge capital demands of Maxis's overseas expansion plan, which could run into resistance from other shareholders.
Saudi Telecom, controlled by the government of the world's largest oil exporter, will invest in the expansion drive after the acquisition, the company said in a statement.
Its part of the deal, which it valued at 11.4 billion riyals ($3.04 billion) would see Saudi Telecom take a 51 percent stake in Maxis's Indonesian unit Natrindo.
Saudi Telecom and Binariang's other shareholder will together underwrite a $900 million loan to expand in India where Maxis operates through its Aircel unit, the statement said.
This transaction represents an important step for the company's drive to become an influential player in the global telecoms sector, Saudi Telecom Chairman Mohammed al-Jasser was quoted as saying in the statement.
It did not say exactly how much it would pay for the stake in Maxis.
Saudi Telecom shares rose 2.83 percent when trading began in Saudi Arabia on Tuesday. They were up 2.43 percent at 0853 GMT.
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 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 was able to capture 30 percent of the market within 18 months of starting operations in May 2005.
Competition in the largest Arab economy is set to intensify now that a consortium led by Kuwait's Mobile Telecommunications Co. has won a third mobile license.
Consortiums led by Bahrain Telecommunications Co., Hong Kong's PCCW and U.S. Verizon Communications won initial approval in April to operate Saudi Arabia's new fixed-line phone network.