PIF nabs controlling stake in Tawal from STC: The Public Investment Fund (PIF) wrapped up its SAR 8.9 bn acquisition of a 51% stake in Telecoms Towers (Tawal) from Tadawul-listed Saudi Telecom (STC), which is itself majority-owned by the sovereign wealth fund, according to a filing to the exchange. The related party transaction saw STC transfer its ownership in Tawal to a third entity as part of a merger with PIF-backed Latis Golden Investment (GLIC).

Quick figure: Tawal is valued at SAR 22 bn, and GLIC is valued at SAR 3 bn — both valuations are excluding the companies’ cashflow and debt obligations.

Dialing up a new telecom giant: The merger will trigger the launch of a new regional telecom infrastructure entity, under which all of PIF’s telecoms assets (comprising some 30k telecom towers across five countries) will be consolidated. The new entity will have annual revenues in the USD 1.3 bn range, according to an earlier statement by the fund.

Who owns what: The new entity is 54.38% owned by the PIF, with STC set to retain a 43.06% stake after injecting some SAR 128.37 mn into it. Prince Saud bin Fahd bin Abdulaziz and Sultan Holding were each given a 1.28% stake in the new entity.

A share swap + cash settlement: In April 2024, the pair said the acquisition would be done by means of a share swap where STC along with the minority owners of Glic will get ownership shares in the new entity. That is in addition to a SAR 8.7 bn capital injection to STC which 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’s GLIC back in 2022 for SAR 3 bn, which landed the consortium a 60% majority stake in the telecom towers company. The PIF made a non-binding offer to buy a 51% stake in Tawal later that year, intending to combine the two.

Market Reax: STC’s stock was down 0.91% closing at SAR 43.75 yesterday.

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