Saudi's PIF to buy Tawal as tower industry consolidation continues

Saudi's PIF to buy Tawal as tower industry consolidation continues

The Gulf region's largest telecom tower company could be on the way following an agreement between Saudi Arabia's sovereign wealth fund PIF (or Public Investment Fund) and Saudi ICT infrastructure service provider Telecommunication Towers Company Ltd (Tawal).

PIF has agreed to buy a 51% stake in Tawal from owner STC Group under an agreement through which PIF and STC will combine Tawal and another  leading ICT infrastructure service provider in Saudi Arabia, Golden Lattice Investment Company (GLIC), to set up a new company with around 30,000 mobile tower sites valued at US$6.7 billion across five countries and estimated annual revenues of around US$1.3 billion 

The new company will be owned 54% by PIF and 43.1% by STC. GLIC minority shareholders will own the remaining share capital. In late 2023 operator Zain KSA resold its remaining 20% stake in Golden Lattice Investment Co. (GLIC) to the PIF for SAR 726 million (about US$193.6 million).

This news did not come out of the blue. The Capacity news site says a tie-up between Tawal and GLIC has been expected for some time.

An analyst quoted by Reuters says STC is a beneficiary from the deal of as the sale price of Tawal is bigger than five times its book value and five times its revenues.

Indeed, an STC statement says that the proceeds generated from the sale of 51% of TAWAL [estimated to be cash inflows of 8.7 billion riyals or US$2.3billion] “will be used to support STC’s growth and expansion strategy along with maximising its shareholders’ return through increasing and diversifying STC’s investments and seizing the expected growth opportunities in the telecommunication and technology sector in the Kingdom of Saudi Arabia and internationally”.

There has been a lot of consolidation in the region's telecom tower sector lately – and Tawal itself has driven some of it. In August 2023 United Group completed the sale of its mobile tower infrastructure unit (TowerCo) in Bulgaria, Croatia and Slovenia to Tawal, while in 2022 Tawal made a full acquisition of Pakistani tower company AWAL Telecom from its shareholders.

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