The Public Investment Fund (PIF) is acquiring a majority stake in the tower infrastructure unit of Saudi Arabia’s largest phone company as it moves to create the region's biggest telecom infrastructure company with projected annual revenue of $1.3 billion.

Saudi Telecom Company (STC) said on Monday it signed a sale and purchase agreement (SPA) with Public Investment Fund (PIF) to sell 51% of Telecommunications Towers Co.(Tawal) for a cash consideration.

Subsequently, 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, forming 'the largest regional company in the telecommunication infrastructure sector", the fund said.

Tawal has an enterprise value (EV) of 21.94 billion riyals ($5.8 billion) on a cash and debt-free basis, PIF said. GLIC was valued at SAR 3.03 billion ($807 million), representing 100% of EV on a cash free and debt free basis.

In 2023, Tawal had revenue of SAR 3.34 billion and gross profit of SAR 2.68 billion.

The new entity, in which PIF will have 53.99% shareholding and STC 43.06%, will own and manage a portfolio of around 30,000 towers across five countries.  It will become one of the largest tower companies globally with estimated annual revenues of approximately $1.3 billion.

Raid Ismail, Head of MENA Direct Investments at PIF said: “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."

The transactions are expected to be completed in the second half of 2024.

The move follows Tawal's acquisition of infrastructure assets in Bulgaria, Croatia and Slovenia.

In a statement on Riyadh's Tadawul bourse, STC said it will inject approximately SAR 533 million in the new entity’s capital to maintain its 43.06% ownership.

The proceeds generated from the sale of 51% of Tawal will be used to support STC's growth and expansion strategy, it added.

(Reporting by Brinda Darasha; editing by Seban Scaria)