In a landmark deal, Saudi Arabia’s Public Investment Fund (PIF) is set to acquire a majority stake in the kingdom’s leading telecommunications infrastructure provider, Tawal, effectively paving the way for the formation of the largest telecom tower company in the Gulf region.
The sovereign wealth fund has struck an agreement to purchase a 51% share of Tawal from its parent company, STC Group. This acquisition is part of a larger plan where PIF and STC Group will merge Tawal with another prominent Saudi ICT service provider, Golden Lattice Investment Company (GLIC), to establish a new entity. This new venture will boast around 30,000 mobile tower sites, with an estimated value of US$6.7 billion and projected annual revenues nearing US$1.3 billion, spanning across five countries.
Upon completion of the merger, PIF will hold a 54% stake in the new company, while STC Group will retain 43.1%. The minority shareholders of GLIC will possess the remaining equity. Notably, in the latter part of 2023, Zain KSA divested its residual 20% stake in GLIC to PIF for a sum equivalent to approximately US$193.6 million.
This significant move in the telecom sector did not catch industry observers by surprise, as speculation regarding a potential collaboration between Tawal and GLIC had been circulating for some time.
A financial expert, as cited by Reuters, acknowledged that STC Group stands to gain substantially from this transaction, with the sale price of Tawal greatly exceeding its book value and revenue multiples.
An official communiqué from STC Group indicated that the proceeds from offloading a 51% interest in Tawal—amounting to roughly US$2.3 billion—will be reinvested to bolster STC’s growth and expansion plans. This strategy aims to enhance shareholder returns by diversifying investments and capitalizing on expected growth opportunities within the telecommunications and technology sectors both domestically and internationally.
Recent times have seen considerable consolidation within the telecom tower market in the region, with Tawal playing an instrumental role in several transactions. For example, in August 2023, United Group finalized the sale of its mobile tower division in Bulgaria, Croatia, and Slovenia to Tawal. Furthermore, the previous year, Tawal fully acquired Pakistani tower company AWAL Telecom, consolidating its position in the market.