Saudi Arabia’s Public Investment Fund is weighing a deal to combine the mobile phone infrastructure of Saudi Telecom Co. and Zain Saudi Arabia “in a merger that would form the kingdom’s largest cellular towers company,” people familiar with the plans told Bloomberg.
The article notes that talks are only in their earlier stages and the plans could be scuttled, but if the PIF goes through with the plan, the deal would create a firm with 23,000 towers, and the PIF could potentially list this new company on the Tadawul, the people said.
According to Bloomberg, STC is majority owned by the PIF, and spun out its more than 15,000 towers into a new subsidiary called Tawal in 2019 and capitalized it with 2.5 billion riyals ($670 million). Zain Saudi has approved offers from investors including the PIF to buy 80% of its towers unit, valuing the business at $807 million.
The Saudi Arabia telecom market is expected to register a CAGR of over 10% through 2026, according to a forecast by mordorintelligence.com.
In recent months, Saudi Arabia increased the number of areas covered by fast internet and mobile technology of 5G as the country continues its plan to expand digital infrastructure with private companies.
As of August, STC has the biggest coverage in the Kingdom when it comes to 5G deployment, with 56 governorates included in its service. Zain is second, which covers 43 governorates.
If the STC-Zain merger of towers goes forward under the PIF plan, that would leave telecom company Mobily as the main competitor with the new entity.
According to the Bloomberg report, the three main mobile operators have tried to reach a deal with each other or with external investors to sell off their mobile towers, “but none of them have managed to close a transaction yet.”
