STC offer to acquire 74% of VIVA Kuwait seen as ‘credit positive’

Saudi Telecom Co’s (STC) tender offer to raise its stake to 100 percent in Kuwait Telecom Co. (VIVA Kuwait) is credit positive, Moody’s Investors Service said in a note on Thursday.

Saudi Arabia’s largest telco will benefit from VIVA’s higher dividends, given the high average revenue per user (ARPU) in Kuwait’s mobile sector. If the tender is concluded, STC will have $1.2 billion (SAR 4.6 billion) in cash.

“We see limited risk to STC pursuing this transaction given that its annual EBITDA generation exceeds its total debt, giving it the capacity to comfortably fund the acquisition,” said Moody’s.

On Monday, STC announced it will offer shareholders KWD 1 per share to buy 74 percent of VIVA Kuwait, in addition to the 26 percent stake it already owns.