State-owned Saudi Telecom will acquire a strategic 25 percent stake in Maxis Communications in a deal worth RM10.6 billion (US$3.05 billion).

Saudi Telecom president Saud Al Daweesh said the investment "will enable us to achieve our stated objective of 10 percent of our revenue to be generated from external sources by 2010."

On completion of the agreement, Saudi Telecom will have a 25 percent effective interest in Maxis and a 51 percent direct stake in PT Natrindo Telepon Seluler (NTS), Maxis' subsidiary in Indonesia, Bernama said.

Reuters had earlier reported that Saudi Telecom was to buy a majority stake of 51 percent in Maxis, but this was denied by the Malaysian mobile operator.

Saudi Telecom said its stake in Maxis would allow the Malaysian operator to negotiate more favourable terms with vendors and service providers and help create value for Binariang, which owns Maxis, and its shareholders.

Maxis to benefit

Binariang chairman Raja Arshad Raja Uda said the alliance would benefit Maxis.

"This partnership with Saudi Telecom provides the opportunity to link Maxis, and its operations in Malaysia, India and Indonesia, to one of the largest and most reputable telecommunications operators in the Middle East in a mutually beneficial way," he said.

Maxis, Malaysia's largest mobile phone operator, owns a 95 percent stake in Indonesia's PT Natrindo Telepon Seluler and 75 percent of India's Aircel.

Binariang, a privately-owned company controlled by billionaire Ananda Krishnan, recently completed a buyout for Maxis in a deal worth about RM40 billion.