Zain KSA scraps Dh2.2bn tower deal with IHS Holding

Signed in March, the telco had agreed to sell and lease infrastructure of its 8,100 mobile tower portfolio to the Mauritius firm

Telco Zain KSA more than doubled its net profit in the three months to September 30 to 121 million riyals. Reem Mohammed / The National

Zain KSA — the Saudi unit of Kuwait-based telecoms operator Zain Group — has terminated an agreement with Mauritius-headquartered IHS Holding due to regulatory reasons, the telco announced in a statement on Tadawul, where the company’s shares trade.

In March, Zain KSA had agreed to sell and leaseback infrastructure — including towers, storage and power supply — of its 8,100 mobile tower portfolio to the IHS. The lease period was for approximately 15 years and could have been renewed for another five years.

IHS was also assigned to build an additional 1,500 towers in the kingdom over the next six years. The whole deal, now cancelled, was worth 2.5 billion Saudi riyals (Dh2.2bn), according to Zain KSA.

“We have received a letter from the Communications and Information Technology Commission (CITC) indicating that IHS Holding did not fulfil the regulatory requirements pertaining to the sale and leaseback of the passive towers infrastructure,” Zain KSA’s statement on Tadawul said.

Therefore, Zain KSA has “disengaged and terminated the agreement to sell and re-rent the infrastructure” to IHS in the kingdom, it added.

Zain is a Kuwait-based mobile phone group whose Saudi arm is one of the three main mobile network operators in the kingdom. The company suffered losses last year as subscriber numbers dwindled following the introduction of new levies on expatriate workers and their families.

However, its net profit for the three months to September 30 more than doubled to 120.7 million riyals as revenue climbed 3 per cent to just over 2bn riyals.

Founded in Lagos in 2001, IHS specialises in building mobile towers and managing sites for network operators. It is the largest telecoms infrastructure provider in Europe, the Middle East and Africa by number of mobile towers.

With the signing of the Saudi deal in March, IHS was aiming to raise its tower portfolio to 33,000, from more than 24,000. Currently, the company — which employs 2,000 people — operates in five countries and has offices in nine.

IHS was pinning high hopes on Zain KSA deal and was expecting double-digit revenue growth in the current financial year because of it, the company's executive vice chairman and group chief executive Sam Darwish told The National in an interview in May.