PIF closes in on Zain KSA's GLIC shares

Zain KSA has received a request from PIF for the MNOs remaining 20% stake in GLIC

PIF Saudi Arabia

Zain KSA, the Saudi Arabian branch of the Bahrain-based regional MNO Zain Group, has received a request from Saudi Arabia’s Public Investment Fund (PIF) on 19th October to exercise its right to acquire the operator’s remaining 20% stake of Golden Lattice Investment Company (GLIC), make in a statement to the Tadawul stock exchange where its shares are traded.

The 20% shareholding stake is valued at SAR 726mn (US$194mn). According to the sale price of the towers the value of the shares in question was SAR 605mn, so the expected financial impact for Zain is SAR 121mn. The board of directors will discuss the request in their upcoming meeting within the next 30 days with a further update expected to be announced within this time frame.

A background to Zain's tower sale

On the 1st September, Zain KSA officially announced the completion of its sale leaseback for the entire 8,069 site portfolio in Saudi Arabia to a consortium of investors led by PIF who took ownership of 60% of a new tower company, GLIC. Zain KSA retained a 20% minority stake with minority investors Prince Saud bin Fahd bin Abdulaziz and Sultan Holding Company each holding 10%.

The sale of Zain’s tower portfolio had been long in the running, with the search for a buyer starting back in 2015 as part of the Group-level SLB which was signed with TASC Towers but was cancelled after the consortium failed to raise the necessary funds. IHS Towers then tried to acquire the portfolio twice, once in 2018 and again in 2021, with the former failing to meet regulatory approval and the latter due to strategic concerns from Saudi MNO Mobily whose towers had also been part of the deal.

Finally a deal was struck with PIF last year, one of Saudi Arabia’s sovereign wealth funds and the engine driving the country’s Vision 2030 strategy. PIF has been set an ambitious plan by the government to build domestic industry champions that can help drive Saudi’s economic transformation from old petro-state to a diverse and modernised economy.

GLIC is up and running at MENAs newest towerco

While only the first batch of 3,000 sites has been officially handed over, GLIC are already responsible for the operations and maintenance of the entire portfolio which consists of a 60:40 split between traditional macro towers and rooftop sites. GLIC is still setting itself up operationally but has an executive team of towerco specialists with their CEO Khaled Muhtadi coming from TAWAL as an advisor to the CEO and previously VP Operations for IHS Towers.

GLIC is in it’s 1st phase of operations, meaning that now that the towerco has responsibility for the portfolio, it is investing in upgrading and expanding the existing network. Driven by regulatory pressures to improve coverage and capacity in-line with Vision 2030, GLIC has 2,500 sites under contract with Zainover the next 10 years, having already delivered around 400 sites so far.

However, the towerco anticipates the deployment of 3,000 to up to 8,000 over the next 3 years based on infrastructure demand and is already competing for greenfield contracts from the Universal Service Fund (USF), which is contracting a huge number of sites driven by all 3 MNOs stc Group, Zain and Mobily.

Tenancy ratios across the entire MENA region remain low at just 1.1X and given this mostly single-tenant network has only recently been transferred it will take some time for colocations to increase, but GLIC is already doing some investment interventions for site upgrades. However, the overall portfolio is quite young, so large structural upgrades for legacy sites is less of an issue.

While currently a very standard towerco model with a lot of outsourcing to local suppliers, GLIC has ambitions to grow their scope of business beyond macro towers. GLIC is currently assessing the business case for hybrid energy solutions to solarize sites and even moving into power-as-a-service, although this remains in development.

While the ESG conversation is lagging behind in MENA towers compared to other more mature regions, GLIC want to be ready for the sustainability conversation, something that is already starting with major MNOs signing up to carbon-reduction commitments and governments implementing sustainability agendas. Despite the abundance of fuel production, the region also isn’t immune to price changes, and it is expected that energy costs will rise over time.

The future of Saudi towers is one of consolidation

Running in parallel to PIFs increasing holding in GLIC, the fund is also in the final stages of its acquisition of 100% of TAWAL, Saudi Arabia’ largest towerco. TAWAL, carved-out from stc Group in 2019, holds over 16,000 sites in the country and is playing a key role in building up the country’s connectivity infrastructure to support technology adoption and the various smart cities and mega-projects under development.

PIF has been the indirect owner of TAWAL since it’s launch as it holds a majority 64% of parent MNO stc Group, but submitted a non-binding offer to acquire a 51% stake in TAWAL from stc last year, that is understood to be in its final stages of completion. PIF has set quite a clear grand strategy of building Saudi Arabian industry champions that are capable of competing and representing the country on a global scale, with telecoms being one of these key industry sectors.

This helped fuel TAWALs expansion into Pakistan earlier this year, and more recently the acquisition of United Group’s 4,800 towers in Bulgaria, Croatia and Slovenia. Now an international towerco heavy-weight, TAWAL has set itself as the country’s ICT infrastructure champion both in domestically and internationally.

Once PIF finalises its various acquisitions, this will leave the fund with majority ownership of both GLIC and TAWAL and a giant portfolio of almost 30,000 towers; ranking around 15th place globally in TowerXchange’s towerco league table.

It makes little sense for PIF to own two competitor towercos in the same market and, while speculative, it is likely we will see some kind of merger between the two. PIF remains committed to growing TAWALs portfolio, evidenced by the towercos involvement in the bidding of Ooredoo’s 20,000 towers which was ultimately won by another up-and-coming regional giant TASC Towers.


Mobily remains as the last Saudi MNO to retain its towers, around 11,000, and TowerXchange is aware there have been some early conversations about further market consolidation, although nothing is expected to finalise in the short or medium term.





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