SAUDI Telecom Co (STC) has begun steps to sell its Indonesian business, banking sources said, as the state-owned firm posted a 41 per cent drop in second-quarter profit, reports Reuters.
Saudi Telecom has invested heavily in its Indonesian unit but competitive pressure has dragged on earnings. Indonesia has 10 operators vying for mobile phone subscribers, making it one of the most competitive markets in Asia after India.
Saudi Arabia’s biggest telecoms operator took a non-cash charge of SR1.1 billion ($293.30 million) in the quarter to write down the value of its investments in Indonesia’s Axis Telekom and Indian mobile phone operator Aircel.
STC has moved its 84 per cent majority stake in Axis to a “held for sale” category, it said in a statement. A sale process for Axis is ongoing, two banking sources said.
Profit for the second quarter dropped to SR1.4 billion from SR2.4 billion in the same period last year. Annual profits at STC have fallen 43 per cent from their 2006 peak. The company, with operations spanning much of the Muslim world, has spent billions of dollars to buy foreign assets, but competitive pressures closer to home may force it to focus more on the domestic business.