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Saudi Telecom Climbs to 8-Month High on Axis Sale: Riyadh Mover

Sept. 26 (Bloomberg) -- Saudi Telecom Co., the Persian Gulf’s second-biggest phone company, rose to the highest in more than eight months after agreeing to sell a unit in Indonesia.

Saudi Telecom gained 3.3 percent to 43.70 riyals by the close in Riyadh, the highest price since Jan. 20, boosting its market value to 87.4 billion riyals ($23 billion). More than 7.3 million shares changed hands, eight times the three-month average. The stock was the most-traded by value on the benchmark Tadawul All Share Index, which slipped 0.3 percent.

PT XL Axiata Tbk., a unit of Malaysia’s largest mobile-phone operator, will acquire PT Axis Telekom Indonesia from Saudi Telecom and settle $865 million of the closely held carrier’s debts, according to a stock exchange filing in Kuala Lumpur today. XL Axiata, a 66.5 percent-owned subsidiary of Axiata Group Bhd., is paying $100 cash for the share capital.

The transaction requires regulatory approval from Indonesia, in addition to approval from XL shareholders, Saudi Telecom said in a statement to the nation’s stock exchange.

“Indonesian operations did not live up to expectations likely due to the competitive environment and resulted in an earnings drag for the company,” Asim Bukhtiar, senior analyst at Riyad Capital, said in an e-mailed response to questions. “Divesting the stake will allow STC to assert focus on its core markets.”

Second-quarter profit dropped 41 percent to 1.43 billion riyals, Saudi Telecom said in July, after the company booked a non-cash charge of 604 million riyals related to reclassifying investment in Axis.

Nine analysts have a buy rating on the phone company, while seven recommend investors hold the shares, according to data compiled by Bloomberg.

To contact the reporter on this story: Deema Almashabi in Riyadh at dalmashabi@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

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