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STC and PIF are merging their tower assets to create one of the largest tower companies in the Middle East
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The deal is part of the ongoing consolidation in the tower segment in the region
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Consolidation of the tower assets will help enhance network coverage and improve connectivity, leading to an improved experience for both people and enterprises
Saudi Arabia's largest service provider, Saudi Telecom Company (STC), announced that it would be merging its towers business, Telecommunication Towers Company Limited (TAWAL), with Golden Lattice Investment Company (GLIC), in which Public Investment Fund (PIF) owns a majority stake.
PIF and STC will own 54% and 43.1%, respectively, in the merged entity, with GLIC minority shareholders owning the remaining 2.9% stake.
"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. The merger is likely to be completed in the second half of 2024 after it acquires the necessary regulatory approvals.
"Combining TAWAL and GLIC is a stepping-stone to consolidating the Saudi tower market and driving further efficiencies and operational excellence to deliver superior experiences and value for customers," said Motaz Alangari, group chief investment officer at STC Group, in a company statement.
Question of scale
"The new merged entity will possess approximately 30,000 mobile tower sites and will become one of the largest tower companies globally with estimated annual revenues of approximately $1.3 billion," said a press release about the deal.
However, this may not be entirely accurate. American Tower Corporation (ATC) is the largest tower company globally, with 224,000 towers, and owns 75,950 towers in India alone. ATC is followed by Indus Towers, which has over 200,000 towers in India.
With 30,000 towers, the merged entity will not be in the top 10 tower companies globally. However, it will still be one of the largest tower companies in the Middle East region.
TAWAL also acquired infrastructure assets in Bulgaria, Croatia and Slovenia last year. This deal also reflects the ongoing consolidation in the tower industry in the Middle East region. Recently, Ooredoo, Zain Group and TASC Towers also announced that they have signed a definitive agreement to create the largest tower company with 30,000 towers and enterprise value of $2.2 billion in the MENA region.
Saudi Arabia's digital infrastructure goals
STC is looking to make its presence felt in the global telecoms industry. It recently increased its stake in the Spanish telco Telefonica from 4.9% to 9.9%.
The deal also reflects Saudi Arabia's growing desire to boost its digital infrastructure and economy to emerge as the Silicon Valley of the Middle East region. Saudi Government is already investing in digitizing the infrastructure. A key initiative is investing $6.4 billion in future technologies, which includes $1 billion for metaverse.
The country seeks to bring down its dependence on an oil-based economy and building of digital infrastructure is crucial to the mission.
As STC also points out, the merger is in line with the Vision 2030 of the Saudi Government, which seeks to use digital technology to improve the economy, reduce dependence on oil, and ensure a better quality of life for its citizens. A robust digital infrastructure is crucial to fostering innovation, which in turn is critical to improving Saudi Arabia’s position in the global digital economy, according to the company statement about the merger.