Zain, Mobily merge tower business while seeking external investment

Saudi Arabian telecom providers Mobile Telecommunications Company Saudi Arabia (Zain KSA) and Etihad Etisalat Company (Mobily) jointly announced on Thursday plans to merge their telecom towers under a registered entity called Towers Company based in the Kingdom.

According to a statement by both telcos, the duo has received in-principal approval from the board of Communications and Information Technology Commission (CITC) on the application submitted by them along with Raidah Investment Company (Al Raidah) and IHS KSA.

The merger will take place for the purpose of obtaining licensing (providing infrastructure wholesale services – category (A) towers and masts), provided that Mobily, Zain KSA and AlRaidah collectively will own the majority of the shares of the company to be established, while IHS maintains a minority of the shares.

“The new entity must fulfill the regulatory requirements related to the licensing and acquisition of the towers of Mobily and Zain KSA in preparation for obtaining the final approval from CITC,” stated the companies in a filing to the Saudi bourse, Tadawul.

It is important to highlight that the CITC’s Board approval – in principle – is for a potential investor, and Etihad Etisalat Company (Mobily) is still evaluating and studying the offers submitted by all potential investors with the options of purchasing the telecoms towers owned by the two companies, merging them into one with other investors, or operating them on their behalf.

“To achieve the best return for the company and its investors through maximizing the operation efficiency and upgrading the network, with the support and supervision of the CITC,” the bourse filing explained.

The merger follows Zain KSA’s MoU with Mobily to form a joint committee to prepare a request for proposal for the telecom towers back in July 2020.

In essence, both telcos are looking to monetize from their towers; Mobily has stated numerously that its tower maneuvers with Zain have “the objective of achieving maximum efficiency and upgrading the communications and information technology system.”

The deal will allow both providers to narrow their scope and resources on upgrading their network and IT system by monetizing passive infrastructure.