PIF Acquires Majority Stake in Telecom Towers Company for $2.32 Billion

Saudi Arabia’s sovereign wealth fund (SWF) – The Public Investment Fund (PIF) – has said that it will acquire a 51% stake in Telecommunication Towers Company Limited (TAWAL) from Saudi Telecom Company (stc) Group for $2.32 billion.

Subsequently, PIF and stc Group will consolidate TAWAL and Golden Lattice Investment Company (GLIC), which holds more than 8,000 telecom towers in the Kingdom and in which PIF holds a majority shareholding, into a new merged entity, forming the largest regional company in the telecommunication infrastructure sector.

TAWAL is the largest telecommunications infrastructure company in Saudi Arabia and one of the largest in the region, It was valued at $5.85 billion, representing 100% of Enterprise Value on a cash free and debt free basis. GLIC was valued at $807 million, representing 100% of Enterprise Value on a cash free and debt free basis.

The combined new entity will be owned 54% by PIF and stc Group will inject approximately $142.08 million in the new entity’s capital to maintain its 43.06% ownership and GLIC will be a minority shareholder owning the remaining issued share capital.

The transactions 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.

A Consolidation Platform

Raid Ismail, Head of MENA Direct Investments at PIF said that the acquisition of majority stake in TAWAL is a significant milestone for the telecommunications industry in Saudi Arabia and the wider region.

By bringing together the assets of GLIC and TAWAL, PIF will establish a consolidated platform on which the telecommunications sector can flourish and give people a better experience to best connect communities and businesses.

“The agreement is also in line with PIF’s strategy and the Saudi Vision 2030. Fast, reliable and accessible connectivity is a key enabler of growth and a cornerstone for the society, and these agreements mark a major stride towards a more interconnected digital future,” Ismail added.

Motaz Alangari, Group Chief Investment Officer of stc Group said that 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.

“The 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. 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,” Alangari added.

The new entity is expected to significantly enhance consumer experience and network coverage, as well as improve connectivity and mobile internet speeds by consolidating Saudi Arabia’s tower assets.

It will also deliver operational efficiencies, help drive wider innovation in the telecommunication sector across the region and globally, and support development of a more efficient and frictionless business environment.

TAWAL has already acquired infrastructure assets in Bulgaria, Croatia and Slovenia, making it the region’s largest independent tower company.

The new merged entity will possess approximately 30,000 mobile tower sites across five countries and will become one of the largest tower companies globally with estimated annual revenues of approximately $1.3 billion.

The proceeds generated from the sale of 51% stake in TAWAL will be used to support stc’s growth and expansion strategy. It will also maximise its shareholders’ return through increasing and diversifying stc’s investments and seize the expected growth opportunities in the telecommunication & technology sector in Saudi Arabia and internationally.