PIF, STC Strike Deal: Largest Telecom Tower Firm in the Making

Saudi Arabia's Public Investment Fund (PIF) has sealed a deal to acquire a majority stake of 51% in Telecommunication Towers Company Ltd (TAWAL) from STC Group (7010.SE), as announced jointly by PIF and STC on Monday.

This agreement marks a significant step towards the formation of the largest telecom tower company in the region.

As per the terms of the agreement, PIF and STC will merge TAWAL with Golden Lattice Investment Company (GLIC) to establish a newly-formed entity boasting approximately 30,000 mobile tower sites and an anticipated annual revenue of around $1.3 billion.

The ownership structure of the combined company will see PIF holding 54%, STC owning 43.1%, and GLIC minority shareholders retaining the remaining share capital.

The transactions involved, including the sale of the 51% stake for an anticipated cash consideration of 8.7 billion riyals ($2.32 billion), are anticipated to conclude in the latter half of the year.

Commenting on the significance of the deal, Ziad Itani, head of TMT equity research coverage at Arqaam Capital, emphasized its transformative impact, stating that it marks the establishment of the largest tower company in the region, with 30,000 towers valued at USD 6.7 billion.

He noted that STC stands to benefit notably from the transaction, with the sale price of TAWAL being five times its book value and revenue.

Itani further highlighted that the influx of 8.7 billion riyals in cash will enable STC to explore additional merger and acquisition opportunities.

This move underscores the ongoing trend of consolidation within the telecom tower sector in the region, reflecting the strategic realignments and growth pursuits of key players in the industry.

Source: Trade Arabia