STC to spend $1bn to make Saudi Arabia a regional data hub

Saudi Telecom Co., the Middle East’s most profitable mobile operator, plans to spend about $1bn to transform the kingdom into a regional data hub, and may sell a stake in its Center3 business to finance the plans.

The investment over the next five years by Center3, as the data unit is known, would help Saudi Arabia host more media, gaming and corporate data, according to Mohammed Alabbadi, STC’s chief carrier and wholesale officer and chairman of Center3. It would also follow an initial investment of $1bn on building data centers and submarine data cables.

STC, which wholly owns Center3, may consider a stake sale in the future.

“We have already had talks with potential investors,” Alabbadi said. “Whether it’s direct equity share or an IPO, those things will be analysed in due course.”

STC is expanding into a range of services beyond its core telephone network business. In the past few years, its digital payments arm has grown to be worth more than $1bn and the company has listed a stake in its Internet services arm.

“The region, and Saudi Arabia specifically, is still a consumer of data when it comes to how we connect to other hubs – whether thats cloud content, media or gaming.” said Alabbadi. “With the growing demand there’s a rising need to host that content locally.”