Q-Tel to Pay $635 Million for Stake in Asia Mobile

Qatar Telecom QSC, the Persian Gulf emirate's monopoly phone operator, agreed to buy a stake in a unit of Singapore Technologies Telemedia Pte. as part of a plan to expand into Asia.

Qatar Telecom, or Q-Tel, will pay as much as $635 million in cash for 25 percent of ST Telemedia's Asia Mobile Holdings Pte. unit, the Doha-based company said in a faxed statement today. Asia Mobile owns 49 percent of StarHub Ltd. (STH), the second-largest phone company in Singapore, and 41 percent of PT Indosat, Indonesia's second-biggest phone company.

Arab phone companies such as Q-Tel, Emirates Telecommunications Corp. and Saudi Telecom Co., the region's biggest, have expanded overseas to increase sales as their domestic markets mature. Emirates Telecommunications, or Etisalat, last year took control of Pakistan Telecommunication Co. and said it's in talks to buy a stake in an Indian company.

``This expansion is a proactive strategy to increase revenue outside Qatar,'' Hadeel Sakkijha, an analyst at Arab Advisors Group, a Jordan-based telecommunications consulting company, said in a phone interview from Amman today. ``Q-Tel, being a monopoly for so many years, is trying to adapt to a new reality.''

Q-Tel shares closed up 1 percent to 242.3 dinars in Doha, bringing the gain this year to 8 percent. ST Telemedia is a unit of Temasek Holdings Pte., an investment arm of Singapore's finance ministry.

Expansion Target

Asia ``is one of the main areas we have targeted for our expansion,'' Nasser Marafih, Q-Tel's chief executive officer, said in the statement. ST Telemedia ``is an ideal partner for us in this endeavor.''

Q-Tel will lose its domestic monopoly under a law signed by Emir Sheikh Hamad al-Thani, the Doha-based Peninsula newspaper reported on Nov. 7.

EFG-Hermes Holding SAE, Egypt's largest publicly-traded investment bank, on Jan. 7 raised its rating on Q-Tel shares to ``long-term buy'' from ``accumulate'' on a forecast the company's 2006 profit climbed 46 percent to $467 million.

Earnings growth is expected to slow this year on ``saturation in the mobile market and a decline in tariffs in preparation for competition,'' the bank said in a report.

Mobile Markets

StarHub competes with Singapore Telecommunications Ltd. (ST) and MobileOne Ltd. in Singapore's mobile phone and high-speed Internet markets. It controls 33 percent of the city-state's mobile phone market with about 1.45 million subscribers, according to today's statement.

Indosat has about 28 percent mobile market share in Indonesia, the statement said. The number of Indonesian mobile-phone users is expected to rise to 81.5 million by 2010 from an estimated 55 million this year, according to BIS Shrapnel Pte, an Australian market research company.

Q-Tel and Asia Mobile will now seek to expand together into southeastern and north Asian countries, ST Telemedia spokeswoman Melinda Tan said in a phone interview today, without providing further details. A call to Marafih's office in Qatar was not answered.

A unit of ABN Amro Holding NV advised Q-Tel and Goldman Sachs advised ST Telemedia.

To contact the reporters on this story: Will McSheehy in Dubai on wmcsheehy@bloomberg.net Tarek Al-Issawi in Dubai talissawi@bloomberg.net

To contact the editor responsible for this story: Teo Chian Wei at cwteo@bloomberg.net

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