* Axiata buys Saudi Telecom's Indonesia unit for undisclosedsum
* Purchase to boost Axiata's Indonesia telecoms presence;likely to speed up consolidation in sector
* Saudi Telecom seeking to sell unit to help repay $1.2 blnloan
By Niluksi Koswanage
KUALA LUMPUR, Sept 26 (Reuters) - Malaysia's Axiata GroupBhd will buy Saudi Telecom's Indonesianunit, boosting its presence in Southeast Asia's largest economyand hastening further consolidation in its over-crowded telcomssector.
The sale of a majority stake in PT Axis Telekom Indonesia(Axis) is also likely to help STC end a tussle with global banksover a $1.2 billion loan tied to the Indonesian firm.
Axiata told the Malaysian stock exchange on Thursday thepurchase, which is being handled by its Indonesian telecomssubsidiary XL Axiata Tbk, will unlock additionalspectrum capacity.
It did not disclose the value of the deal, but said Axis hasan enterprise value of $865 million.
The deal supports the Indonesian government's push toconsolidate the telcoms industry, where several players,including Axis and PT Bakrie Telecom Tbk havestruggled to pay off debts and maintain positive margins.
The acquisition now leaves around nine mobile operators in amarket where mobile penetration reached 115 percent by end-2012.
Shares in XL Axiata Tbk, one of many Southeast Asian unitsof Axiata, jumped more than 4 percent and outperformed the widerJakarta market after the deal was announced.
"XL is committed to investing in the next generation ofmobile technologies and to bring back the broader industryecosystem to healthier economics," XL Axiata President DirectorHasnul Suhaimi said in the company statement.
RELIEF FOR SAUDI TELECOM?
STC, which had an 84 percent stake in Axis, said in astatement that it had recorded a realised loss of 705 millionSaudi riyals ($187.99 million) for its Indonesian investment inthe second quarter of 2013.
The final impact of STC's financials will be determined oncethe Axis deal is concluded, it added.
Based on a 100 percent enterprise value of $865 million, theAxis sale would repay just part of the $1.2 billion loan STC hadtaken in 2011 to finance the Indonesian firm's expansion.
STC had sought to restructure the loan after a change inmanagement, but bankers said the company was obliged to honourit in full, which it refused to do, sources have told Reuters.
The banks, led by Deutsche Bank, threatened to sue STC. Theloan was structured under English law which means the bankscould pursue legal options outside Saudi Arabia if need be.
HSBC, Citigroup and China Development Bank also had exposure to the loan, the sources said.
The loan also included a $400 million facility for equipmentpurchases from China's Huawei, underwritten by China DevelopmentBank, and a $350 million facility for equipment purchases fromEricsson, arranged by HSBC and backed by EKN, the Swedish ExportCredit Agency.
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