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Saudi Telecom Company (stc) announces the signing of agreements with the Public Investment Fund (PIF) to sell a stake in Telecommunications Towers Company (TAWAL) and to combine the businesses of TAWAL and Golden Lattice Investment Company (GLIC).
| Element List | Explanation |
|---|---|
| Introduction | With reference to the announcement made by Saudi Telecom Company (stc) on the Saudi Exchange dated 24-10-2022 related to receiving a non-binding offer from the Public Investment Fund to acquire 51% of the shares of Telecommunications Towers Company (TAWAL). |
| Transaction Details | stc announces the signing of a sale and purchase agreement (SPA) on 21-4-2024 with the Public Investment Fund (PIF) to sell 51% of TAWAL’s shares for a cash consideration. Additional Agreements also signed to transfer the ownership of both TAWAL and GLIC (owns and manages 8,069 telecommunications towers in the Kingdom of Saudi Arabia, and owned by PIF, HRH Prince Saud Bin Fahad bin Abdulaziz and Sultan Holding Company) under a new entity. As a result, the shareholding of the new entity will be as the following: - PIF with an ownership of [53.99%] - stc with an ownership of [43.06%] - HRH Prince Saud Bin Fahad bin Abdulaziz with an ownership of [1.48%] - Sultan Holding Company with an ownership of [1.48%] The new entity will own and manage a portfolio of around 30,000 towers across 5 countries. |
| Transaction Value | TAWAL was valued at SAR 21.94 billion (USD 5.85 billion), representing 100% of Enterprise Value on a cash free and debt free basis. GLIC was valued at SAR 3.03 billion (USD 807 million), representing 100% of Enterprise Value on a cash free and debt free basis. The cash consideration is estimated to be SAR 8.7 billion, noting that the final cash consideration will be based on the final accounts of debt, cash, and working capital at completion of the transaction. |
| Transaction Terms | The cash consideration to be received by stc will be based on the final accounts of debt, cash, and working capital at completion of the transaction. The transaction documents above contain certain conditions precedent, which must be satisfied prior to completion, including -but not limited to- obtaining the approval from the general assembly of stc, the approval of the Communications, Space and Technology Commission, as well as any other regulatory and commercial conditions. |
| Parties of the Transaction | stc, PIF, TAWAL, the new entity, HRH Prince Saud bin Fahad bin Abdulaziz and Sultan Holdings Company. |
| Transaction Funding Method | The purchase of GLIC will be financed through an exchange of shares between the new entity and the shareholders of the GLIC; and the transfer of TAWAL ownership under the new entity will be through an exchange of shares stc will inject approximately SAR 533 million in the new entity’s capital to maintain its 43.06% ownership. |
| Transaction Execution Date | 2024-04-21 Corresponding to 1445-10-12 |
| Description of the Business of the Asset forming the Subject Matter of the Transaction | Owning, constructing, operating, leasing and commercializing telecom towers. |
| Asset Book Value | The book value of TAWAL is SAR 3,171 million as per stc’s consolidated financial statements for the year ended 31 Dec 2023. |
| Financial Statements for the Last Three Years of the Asset forming the Subject Matter of the Transaction | Revenues for TAWAL: In 2021, the amount is SAR 2,846m. In 2022, the amount is SAR 2,868m. In 2023, the amount is SAR 3,343m.
Gross profit for TAWAL: In 2021, the amount is SAR 2,237m. In 2022, the amount is SAR 2,251m. In 2023, the amount is SAR 2,684m. There is no financial data available for Golden Lattice Investment Company as it was recently established. |
| Transaction reasons | The transaction enables the creation of a new national champion in the telecommunications sector which will combine the ownership of the assets of TAWAL and GLIC. This is in line with stc’s strategy related to growth and expansion by retaining ownership in strategic value-add assets, such as tower infrastructure companies, with strong growth and expansion potential. |
| Expected Impact of the Transaction on the Company and Its Operations | 1- The financial impact will be positive and material. Any gains from this transaction will be reflected on stc’s consolidated statement of profit or loss. 2- Equity method will be used to account for the stc’s investment in the new entity. Noting that the financial impact will not be reflected and the accounting method will not be changed for stc’s investment in the new entity, unless the necessary approvals are obtained and all transaction procedures are completed. |
| Details of Using The Proceeds of the Asset Sale | The proceeds generated from the sale of 51% of TAWAL will be used to support stc’s growth and expansion strategy along with maximizing its shareholders’ return through increasing and diversifying stc’s investments and seizing the expected growth opportunities in the telecommunication & technology sector in the Kingdom of Saudi Arabia and internationally. |
| Related Parties | PIF is considered a related party being the largest shareholder in stc (with 64% ownership) and the following Board of Directors members have indirect interest being representatives of the PIF: H.E Dr. Khaled H. Biyari, Mr. Yazeed A. AlHumied, Ms. Rania M. Nashar, Mr. Arndt F. Rautenberg and Mr. Sanjay Kapoor. Therefore, this transaction shall be subject to a vote to authorize it from stc’s general assembly (which will be scheduled at a later date) in accordance with the relevant laws and regulations. |
| Additional Information | Any material developments will be announced in due course. |
The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.
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