Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), will acquire a 51 percent stake in Telecommunication Towers Company Limited (Tawal) from the Saudi Telecommunications Company (STC Group).

Tawal is the largest telecoms infrastructure company in Saudi Arabia and has an enterprise value of $5.85 billion, according to the agreement.

Saudi Arabia telecom towers
– Getty Images

As part of the deal, PIF and STC Group will consolidate Tawal and Golden Lattice Investment Company (GLIC) – in which PIF holds a majority shareholding – into a new merged entity, to form the region's biggest company in the telecoms infrastructure sector.

The PIF owns 64 percent of STC, with the wealth fund expected to play a crucial role in the Kingdom's 2030 ambition which aims to reduce its economy's reliance on the oil industry.

The tower company will comprise 30,000 telecommunications towers, with estimated annual revenues of approximately $1.3 billion.

PIF will own 54 percent of the new entity, while STC Group will hold a 43.1 percent stake. GLIC minority shareholders will hold the remaining shares.

The deal is expected to be completed in the second half of the year, subject to regulatory approval and other necessary conditions being met.

It was first reported in October 2022 that the PIF had made a non-binding offer to buy a majority stake in STC's tower unit business.

“Today's announcement is a significant milestone for the telecommunications industry in Saudi Arabia and the wider region," said Raid Ismail, head of MENA direct investments at PIF.

"By bringing together the assets of GLIC and Tawal, we will establish a consolidated platform on which the telecommunications sector can flourish and give people a better experience to best connect communities and businesses. It is also in line with PIF’s strategy and the Saudi Vision 2030.

"Fast, reliable, and accessible connectivity is a key enabler of growth and a cornerstone for the society, and these agreements mark a major stride towards a more interconnected digital future.”

STC said the agreement is part of the group's overall strategy to "accelerate the digital transformation of society and the economy in Saudi Arabia and the region."

In April of last year, Tawal expanded its operations beyond the Middle East after it agreed to a $1.34 billion deal to acquire United Group’s telecommunications tower assets across Europe, in Bulgaria, Croatia, and Slovenia.