Saudi Arabia’s PIF, stc Group to create region’s largest tower company

Saudi Arabia’s Public Investment Fund (PIF) has agreed to acquire a 51 per cent stake in stc Group’s Telecommunication Towers Company (TAWAL), a deal that is set to create the region’s largest telecom tower company.

PIF and stc Group will consolidate TAWAL and Golden Lattice Investment Company (GLIC), in which the Saudi wealth fund holds a majority stake, to set up a newly-formed company with around 30,000 mobile tower sites and estimated annual revenues of around $1.3bn, the two entities said in a joint statement.

“By bringing together the assets of GLIC and TAWAL, we will establish a consolidated platform on which the telecommunications sector can flourish and give people a better experience to best connect communities and businesses,” said Raid Ismail, head of MENA Direct Investments at PIF.

“Fast, reliable and accessible connectivity is a key enabler of growth and a cornerstone for the society, and these agreements mark a major stride towards a more interconnected digital future.”

The merged entity will be owned 54 per cent by PIF and 43.1 per cent by stc Group, with GLIC minority shareholders owning the remaining issued share capital.

The deal is subject to regulatory approvals and it is expected to be closed in the second half of 2024.

The new entity is expected to significantly enhance consumer experience and network coverage, as well as improve connectivity and mobile internet speeds by consolidating Saudi Arabia’s tower assets.

It will also deliver operational efficiencies, help drive wider innovation in the telecommunication sector across the region and globally, and support the development of a more efficient and frictionless business environment.

The deal follows TAWAL’s acquisition of infrastructure assets in Bulgaria, Croatia and Slovenia.

PIF, stc Group joins GCC tower investments

Meanwhile, GCC telecoms companies have been divesting from tower assets to reduce infrastructure costs and focus on information and communications technology, with such deals attracting specialised tower operators looking to enter new, high-growth markets.

PIF’s acquisition of a majority stake in TAWAL follows Ooredoo, Zain Group and TASC Towers Holding’s agreement to merge their portfolio of about 30,000 cellular towers into a $2.2bn entity last December.

Ooredoo and Zain take 49.3 per cent each in the merged entity, through an asset and cash equalisation process. The founders of TASC will retain the remaining shareholding and will continue to manage the operations of the business.

Zain Saudi Arabia sold 8,069 towers to PIF for about SAR3.02bn in February 2022 while Omantel, in 2021, sold 2,890 towers to Helios Towers for $575m.

The Kuwaiti telecoms giant offloaded 1,620 towers to IHS Holding for $130m in 2020. In January 2023, Zain’s Iraqi unit entered into a definite 15-year agreement to sell and lease back 4,968 towers to TASC Towers Iraq for $180m.

Read: Qatar’s Ooredoo, Zain and TASC to create $2.2bn tower company