Saudi’s challenger telco on track for 2.4 billion riyal deal
Saudi Arabia’s second telco Zain KSA has changed ownership of its unit Zain Business Limited to the Public Investment Fund (PIF) for 3 billion Saudi riyals (€807 million), clearing the way for the sale of its 8,069 towers. Under the deal, the kingdom’s sovereign wealth fund changed the unit’s name to the Golden Lattice Investment Company (GLI), Zain KSA told the Tadawul stock exchange. As part of the asset purchase agreement, Zain KSA will receive a cash amount of 2.4 billion riyals (€640 million) and a 20 per cent stake in GLI, reports The National.
Zain KSA, AKA Mobile Telecommunications Company Saudi Arabia, is the Saudi Arabian unit of Kuwait-based telecoms operator Zain Group. The completion of this transaction in Saudi Arabia follows similar tower deals that Zain has completed in its operations in Kuwait and Jordan. The agreement stipulates that all the units need to be transferred to GLI within 18 months from the financial completion, by which time at least 3,000 sites should already be transferred.
In the new shareholding structure of GLI the PIF will own a 60% stake, Zain KSA will retain 20%, while Sultan Holding Company and Prince Saud bin Fahad will each snap up 10% each. This deal creates enormous shareholder value and gives Zain KSA funds to invest in technology to improve customer mobile and data experiences, according to Bader Al Kharafi, vice chairman of Zain KSA.
The financial liquidity and profitability along with higher yielding digital investments and a healthier infrastructure is central to Zain’s transformational 4Sight strategy, said Al Kharafi.
Under the terms of the offer, Zain KSA will sell its passive physical towers infrastructure and retain all other wireless communication antennas, software, technology and intellectual property with respect to managing its telecoms network.
The PIF plays an integral role in the kingdom’s Vision 2030 plan, which seeks to diversify the Arab world’s largest economy and reduce its reliance on oil. In a five-year strategy, announced in January, the fund aims to double the value of its assets under management to €1.07 trillion and commit €40bn a year to develop the domestic economy until 2025. The PIF raised €3.2bn from the sale of a 6% stake in Saudi Telecom Company, the country’s largest mobile operator, through a secondary share offering last December.