DUBAI:Saudi Arabia’s sovereign wealth fund PIF has agreed to buy a 51% stake in Telecommunication Towers Company Ltd (TAWAL) from STC Group, paving the way for the creation of the region’s largest telecom tower company, PIF and STC said on Monday.
Under the agreement, PIF and STC will combine TAWAL and Golden Lattice Investment Company (GLIC) to set up a newly-formed company with around 30,000 mobile tower sites and estimated annual revenues of around $1.3 billion, they said in a joint statement.
The combined new entity will be owned 54% by PIF and 43.1% by STC, while GLIC minority shareholders will own the remaining share capital. The deals, including the 51% stake sale for an expected cash consideration of 8.7 billion riyals ($2.32 billion) are expected to be completed in the second half of the year.
“The deal marks a milestone in the establishment of the biggest Tower company in the region with 30k towers valued at $6.7billion,” Ziad Itani, head of TMT equity research coverage at Arqaam Capital, told Reuters in an emailed statement.
“STC is a clear beneficiary from the deal of as the sale price of Tawal” is bigger than five times its book value and five times its revenues, Itani said, adding that the cash inflows of 8.7 billion riyals will allow the company “to pursue additional M&A and investment opportunities”.
STC CEO Olayan Mohammed Alwetaid told Reuters that the transaction was “a step forward in STC Group’s expansion, growth, and recycling the return on investment.”
Published in The Express Tribune, April 23rd, 2024.
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