stc receives non-binding offer from PIF to acquire 51% of TAWAL for around SAR 22 bln

Logo of Saudi Telecom Co. (stc)

Saudi telecom provider stc received a non-binding offer from the Public Investment Fund (PIF) to acquire 51% of stc's fully-owned subsidiary, Telecommunications Towers Co. (TAWAL), according to a filing to Tadawul.

After excluding debts and cash, stc will maintain a 49% stake in TAWAL that is valued at SAR 21.94 billion ($5.85 billion).

The offer does not represent any binding commitment to both parties. It remains subject to completing the due diligence and reaching a final and binding agreement.

The agreement is conditional on obtaining all regulatory approvals from relevant authorities, including the approval from the General Authority for Competition (GAC), as well as internal approvals from the respective parties, and any other conditions that may be agreed on by the parties.

The offer comes in line with stc’s strategy related to growth and expansion by retaining ownership in strategic value-added assets, such as infrastructure companies (Towers), as well as benefiting from the return on these assets in growth and expansion. Further, the deal aims to support capital recycling to ensure enhancing the telco’s ability to invest in new domains and maximize shareholders’ equity sustainably.

The offer is currently being assessed and evaluated. If a final and binding agreement is reached between the two parties, a recommendation will be submitted to stc’s general meeting to authorize it, as PIF is considered a related party, being the major shareholder in stc, with a 64% stake. The following board members have indirect interest, being representatives of the PIF: Khaled Biyari, Yazeed Alhumied, Rania Nashar, Arndt Rautenberg and Sanjay Kapoor.

If the potential acquisition is completed, the financial impact is expected to be positive and material. Any gains from this transaction will be reflected on stc’s consolidated statement of profit or loss.

Any material developments will be announced in due course.

Commenting on the deal, CEO of stc Olayan Al Wetaid, said the group continues to achieve its growth and expansion strategy by increasing and diversifying investments in the communications and information technology sector. This is besides leading the digital transformation locally and internationally through investing in leading entities in the digital economy regionally and globally.

He added that the offer is in line with the global trends of telecommunications and information technology companies, noting that the group continues to build and develop a reliable digital infrastructure to enhance the Kingdom's position as a regional hub.

In addition, the telco contributes to enabling digital transformation for the public and private sectors, which will be reflected in strengthening the digital economy. This is in line with the Kingdom's goals towards an ambitious nation and thriving economy, Al Wetaid said.