Zain KSA transfers ownership of towers infrastructure unit to PIF-led group

Saudi Arabia’s sovereign wealth fund will acquire 60% majority stake, telecoms company will retain 20% share and Sultan Holding Company and Prince Saud bin Fahad will snap up 10% each

Zain KSA, also known as Mobile Telecommunications Company Saudi Arabia, is the Saudi Arabian unit of Kuwait-based telecoms operator Zain Group. Reem Mohammed / The National

Saudi Arabia’s second-largest telecoms company Zain KSA said on Sunday it has transferred ownership of its unit Zain Business Limited to the Public Investment Fund (PIF) for more than 3 billion Saudi riyals ($807 million), paving the way for the sale of its 8,069-tower infrastructure.

Under the deal, the kingdom’s sovereign wealth fund changed the unit’s name to the Golden Lattice Investment Company (GLI), Zain KSA said in a statement on Sunday to the Tadawul stock exchange, where its shares are traded.

As part of the asset purchase agreement, Zain KSA will receive a cash amount of 2.4 billion riyals and a 20 per cent stake in GLI.

The sale of 8,069 tower assets over to a PIF-led consortium was approved in February.

Zain KSA, also known as Mobile Telecommunications Company Saudi Arabia, is the Saudi Arabian unit of Kuwait-based telecoms operator Zain Group.

The completion of this transaction in Saudi Arabia follows similar tower deals that Zain has completed in its operations in Kuwait and Jordan.

Under the agreement, all the units need to be transferred to GLI within 18 months from the financial completion, by which time at least 3,000 sites should already be transferred, the statement said.

As per the new shareholding structure of GLI, the PIF will own a 60 per cent stake, Zain KSA will retain a 20 per cent stake, while Sultan Holding Company and Prince Saud bin Fahad will each snap up 10 per cent shares in the telecoms company.

This transaction creates “enormous shareholder value” and gives Zain KSA “greater financial muscle” to invest in the latest technologies and innovation that enhance the customer mobile and data experience, Bader Al Kharafi, vice chairman of Zain KSA, said in February.

“The proceeds of this sale will enhance the company’s financial liquidity and profitability … the unlocking of capital to focus on higher yielding digital investments and optimisation of infrastructure that creates internal efficiencies is a core element of Zain’s transformational ‘4Sight’ strategy,” Mr Al Kharafi said at the time.

Under the terms of the offer, Zain KSA will sell its passive physical towers infrastructure and retain all other wireless communication antennas, software, technology and intellectual property with respect to managing its telecoms network.

This move is in line with the company's strategy to develop the local information and communication technology sector and localise the related technologies in the kingdom, Zain KSA said.

The PIF plays an integral role in the kingdom's Vision 2030 plan, which seeks to diversify the Arab world's largest economy and reduce its reliance on oil.

In a five-year strategy that was announced in January, the fund aims to more than double the value of its assets under management to $1.07 trillion and commit $40bn a year to develop the domestic economy until 2025.

The PIF raised $3.2bn from the sale of a 6 per cent stake in Saudi Telecom Company, the country's largest mobile operator, through a secondary share offering last December.

Last August, the fund bought a stake in Italian luxury car maker Pagani, which makes some of the world’s most expensive supercars and counts Mark Zuckerberg and Lionel Messi among its high-profile clients.