PIF, STC to form the largest telecom tower firm in the region

PIF, STC to form the largest telecom tower firm in the region

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 telecommunications tower company, PIF and STC said on Monday.

Under the agreement, PIF and STC will combine TAWAL and Golden Lattice Investment Company (GLIC) to form a newly formed company with approximately 30,000 mobile tower sites and estimated annual revenue 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 minority shareholders GLIC will own the remaining share capital. The transaction, which includes the sale of a 51% stake for an expected cash consideration of 8.7 billion riyals ($2.32 billion) is expected to be completed in the second half of this year.

“The deal marks a milestone in the establishment of the largest Tower company in the region with 30k towers valued at $6.7 billion,” Ziad Itani, head of TMT equity research coverage at Arqaam Capital, told Reuters in an emailed statement.

“STC is the clear beneficiary of the deal because the sale price of Tawal” is greater than five times its book value and five times its earnings, Itani said, adding that the cash inflow of 8.7 billion riyals will allow the company “to continue additional M&A and investment opportunities”.

STC Chief Executive Officer Olayan Mohammed Alwetaid told Reuters that the transaction was “a step forward in the expansion, growth and recycling of STC Group’s investment returns.”