(Bloomberg) — Saudi Arabia’s sovereign wealth fund has made a $484 million bid for a controlling stake in the mobile phone towers unit of the kingdom’s second-largest telecom company.
The Public Investment Fund offered to buy a 60% stake in Zain Saudi’s towers infrastructure in a deal that would value the unit at 3 billion riyals ($807 million).
It also received bids from Prince Saud Bin Fahad and Sultan Holding Co. to acquire an additional 10% stake each. Mobile Telecommunications Co. Saudi Arabia, as Zain Saudi is formally known, would own the remaining 20%.
“The agreement would result in unlocking cash invested in the fixed assets of the company, and this liquidity may be used to pay down debt which would reduce financial charges,” said Muhammad Faisal Potrik, head of research at Riyad Capital. There would be a corresponding rise in annual lease payments for these towers, but the net impact is expected to be “positive” for Zain Saudi, he said.
If the deal goes ahead it would be the first sale of telecommunications infrastructure in the kingdom, despite years of the three main mobile operators trying to reach a deal with each other or with external investors.
Zain Saudi said earlier on Tuesday that a deal to combine its towers with Etihad Etisalat, also known as Mobily, and bring in new investors had been abandoned. Mobily has been considering a sale of its towers since 2015, while a possible merger of all the kingdom’s towers was discussed in 2016, people familiar told Bloomberg at the time.
The Public Investment Fund holds large stakes in some of the kingdom’s biggest companies, including Saudi Telecom Co. and Saudi National Bank. It raised its holding in energy producer International Co. for Water & Power Projects to 50% last year, saying the move was part of the wealth fund’s strategy to support renewable energy developments.
The shares rose as much as 2.4%, giving the company a market capitalization of about 13 billion riyals. They have gained 5.7% this year.
(Updates with analyst’s quotes, share price)
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