The fate of the Public Investment Fund’s acquisition of stc-owned Tawal will be decided this month when the telecom giant’s shareholders meet on Wednesday, 24 July, to vote on the transaction, according to a filing to the exchange (pdf)

The transaction: PIF is looking to take a controlling stake in the Telecoms Towers Company (better known as Tawal), but stc will still have exposure

The outcome isn’t really in question: PIF owns 64% of stc.

Signoff will bring us one step closer to the emergence of the region's largest telecom infrastructure company: The PIF and stc will work together to consolidate Tawal and another infrastructure player, Golden Lattice Investment (Glic), in a new entity that will own and manage a portfolio of c. 30k towers across five countries. The new entity will have annual revenues in the USD 1.3 bn range.

Ownership structure: The PIF will hold a 54% stake in the new company, followed by stc (43%), while other minority shareholders will hold a combined 3%. Stc will also have to inject SAR 533 mn into the new entity for its shareholding amount to settle at 43%, bringing the capital of the new entity at SAR 1.2 bn, according to our calculations.

The mechanism: The acquisition of Tawal will be done by means of a share swap where stc along with the minority owners of Glic will take stakes in the new entity, while stc will also receive SAR 8.7 bn that it plans to use to finance its “growth and expansion strategy along with maximizing its shareholders’ return.”

This has been in the works since 2022: A PIF consortium bought a 60% stake in Zain KSA’sGlic back in 2022 for SAR 3 bn, which landed the consortium a 60% majority stake in the telecom towers company. Later that year, The PIF made a non-binding offer to buy a 51% stake in Tawal with a view to combining the two.

(Editor's Note: This story was updated on 24 July 2024 to note that PIF owns 64% of stc, not of Tawal.)

Tags: