Saudi Telecom to borrow $2.6bn for Oger buy

Saudi Telecom (STC) said on Tuesday it would borrow SR9.6 billion from local banks to finance its purchase of a 35 per cent stake in Oger Telecom.

"We are at a very advanced stage of talks to borrow SR9.6 billion to finance this deal," Chairman Mohammed Al Jasser said in an interview on Al Arabiya Television.

The largest Arab telecoms firm by market value would take loans from local banks and could look at selling Islamic bonds in the future.

Jasser is also deputy-governor of the Kingdom's central bank, which has been struggling to manage a surge in liquidity and inflation.

"Local banks are very competitive and they demand getting the lions' share so we will not seek other sources of financing," he said.

Standard & Poor's on Monday gave STC an 'A+' long-term foreign currency corporate credit rating, fifth from the top of investment grade.

Moody's Investors Service also assigned A1 long-term local and foreign currency issuer ratings to Saudi Telecom.

"After the ratings, we will study the issue of sukuk to finance any company needs or refinance these loans when the market is ready," Jasser said.

STC completed its purchase of Dubai-based Oger Telecom earlier this month for SR9.6bn, gaining access to markets from Turkey to South Africa.

STC was looking to borrow at least SR5.76bn to help finance the purchase, three bankers told Reuters on Monday. (Reuters)