Zain KSA approves PIF-led consortium's bid to acquire 80% stake

Saudi Arabia’s sovereign wealth fund acquired a 60% majority stake while Sultan Holding company and Prince Saud bin Fahad snapped up 10% each

Zain KSA is the Saudi unit of Kuwait-based telecoms operator Zain Group. Reem Mohammed / The National

Saudi Arabia’s second-largest telecoms company Zain KSA approved a Public Investment Fund-led consortium offer to acquire an 80 per cent majority stake in its 8,069-tower infrastructure for more than 3 billion Saudi riyals ($807 million).

Under the deal, the kingdom’s sovereign wealth fund acquired a 60 per cent stake in Zain KSA, with Sultan Holding company and Prince Saud bin Fahad each also snapping up 10 per cent shares in the telecoms firm.

Zain KSA, also known as Mobile Telecommunications Company Saudi Arabia, retained the remaining 20 per cent shar. However, the PIF has a call option to buy the remaining 20 per cent for a specified amount, the company said on Tuesday.

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

“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.

Zain KSA is the Saudi 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 terms of the offers, 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 transaction is in line with the 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.

Last August, it 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 list of high-profile clients.