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STC and Telenor weighing up options for Malaysian holdings

Norwegian group Telenor and Saudi operator STC are both considering whether to continue their operations in Malaysia.

The fiercely competitive market has led Telenor to weigh up options for its 49% stake in Malaysian operator Digi. These options could include forming a joint venture with an Asian operator or shifting the stake entirely; the holding its valued at around $4.6 billion.

Telenor has only just begun reviewing its options so is unlikely to reach a decision any time soon, but its decision was prompted by “challenging” market conditions which led to a 4% drop in revenue for the operator in Q2 following lower sales of handsets.

The operator also revealed that it has seen ARPU drop in Malaysia by around 6% “due to continued price pressure on international traffic and domestic data, combined with decline in voice revenues.” Telenor does have a strong presence in other Asian markets, including Bangladesh, India, Myanmar, Pakistan and Thailand.

Meanwhile, Saudi Telecommunications Company is mulling over whether to sell its holding in market leader Maxis to a pension fund or other investor. It has not initiated any formal auction processes and may in fact choose to retain the assets.

STC holds its stake in Maxis via its 25% interest in holding company Binariang GSM, which is the majority shareholder in the Malaysian operator. This translates to STC having an effective interest of 16.2% in Maxis, valued at roughly $1.8 billion. Binariang is also the majority shareholder in Indian operator Aircel, which is in the process of merging with Reliance Communications.

Data from GSMA Intelligence shows that the country’s three largest operators are very evenly matched in terms of subscribers numbers, demonstrating how competitive the market is. Maxis leads the market with 12.8 million connections, while Digi has 12.3 million and Celcom 12.1 million.

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