STC sells 15% stake in STC Pay to Western Union

Saudi Telecom Co. (STC) sold a 15% stake in STC Pay, the fully-owned subsidiary of the telecom service provider, to Western Union for $200 million (SAR 750 million), the company said in a statement to Tadawul.

The proceeds will be used to finance STC Pay’s capital and support long-term expansion plans.

Upon the completion of the deal, Western Union will pay $133.3 million (SAR 500 million) for a 10% equity stake in STC Pay.

Another $66.67 million (SAR 250 million) will be paid by Western Union, if STC Pay obtains a digital banking license. Following this, Western Union’s equity stake in STC Pay will rise to 15%.

The completion of the deal is conditional to regulatory approvals from relevant authorities, the statement said.

STC Pay, which is the digital payment unit of STC, currently has a capital of SAR 400 million, in addition to a shareholder loan of SAR 148 provided by STC. The shareholder loan will be converted to capital in STC Pay upon the completion of the deal.

The telco will inject SAR 400 million as additional capital, increasing STC Pay’s capital to SAR 1.45 billion following the completion of the deal.

The firm will also inject an additional SAR 802 million in STC Pay in case it receives digital banking license.

The deal has no impact on STC’s financial statements, in accordance with international financial reporting standards (IFRS).

There are no related parties, the statement said, adding that any material development will be announced in due course.