With 30,000 mobile towers, the towerco looks the same size as the Ooredoo, Zain and TASC Towers deal in December, but worth more
Saudi Arabia’s sovereign wealth fund PIF will acquire a 51% stake in towerco TAWAL from stc Group to create what they say is the biggest regional towerco with around 30,000 mobile tower sites and estimated annual revenues of around $1.3 billion. The partners say the TAWAL deal creates an entity with an enterprise value of $5.85 billion per the agreement.
The deal also pips December’s Ooredoo, Zain and TASC Towers tie-up to create what they said at the time was the largest regional towerco in the Middle East, also with around 30,000 towers and a combined estimated current enterprise value of $2.2 billion.
The PIF stc deal also reaches into Europe where TAWAL completed the acquisition of United Group’s telecom tower assets in September last year and began operations at 4,800 sites spread across Bulgaria, Croatia, and Slovenia. In 2022 stc launched TAWAL Pakistan and runs an estate of more than 15,000 towers within the Kingdom of Saudi Arabia.
PIF and stc Group plan to combine TAWAL and Golden Lattice Investment Company (GLIC) – in which PIF holds a majority shareholding – to form the region’s largest telecom tower company. The combined new entity will be owned 54% by PIF and 43.1% by stc Group, with GLIC minority shareholders owning the remaining issued share capital.
The transactions – 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 2024 after obtaining all required regulatory approvals and satisfying other necessary conditions under the agreements.
Telefónica and Spanish government watching closely
The deal won’t have gone unnoticed in Spain given how favourable it is to the Saudi incumbent. “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, Arqaam Capital head of TMT equity research Ziad Itani told Reuters, adding that the cash inflows of 8.7 billion riyals will allow the telco “to pursue additional M&A and investment opportunities”. stc Group became Telefónica’s largest shareholder in December by building a 9.9% stake worth €2.1 billion.
What the dealmakers said
“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 PIF head of MENA Direct Investments Raid Ismail.
“These agreements are part of stc Group’s continuous endeavour to grow and maximise value in the most sustainable manner, by recycling capital while retaining ownership in strategic value-added assets to benefit from the return on these assets and enable expansion into new domains,” said stc Group chief investment officer Motaz Alangari.
“Today’s announcement is in line with stc Group’s strategy and the pivotal role that the group is playing in accelerating the digital transformation of society and the economy in Saudi Arabia and the region,” he said. “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.”