Saudi PIF's offer for 51% tower stake is credit neutral for Saudi Telecom - S&P

The Saudi sovereign wealth fund the Public Investment Fund’s nonbinding offer to acquire 51% of Saudi Telecom Co.'s (STC) fully owned towers subsidiary Tawal is credit neutral as the divestment will have limited effect on STC’s financials. The divestment, part of STC’s strategy to monetize its assets, follows earlier deals such as the listing 20% of the technology company STC Solutions in September 2021 and the sale of a 15% stake in Saudi's first licensed digital bank STC Pay in December 2020. The company also established an internet of things (IoT) joint venture with the PIF (unrated), it's main shareholder, earlier in 2022. Tawal owns and operates more than 15,500 towers (4G and 5G) in Saudi Arabia and had plans to acquire Pakistani tower company AWAL earlier this year. Tawal is valued at more than 21 billion riyals ($5.8 billion), "implying proceeds from a 51% stake of about SAR11 billion for STC". It generates most revenue and profits from STC, which are eliminated following the divestment. While there is no financial debt and limited cash at Tawal, S&P expects a moderate but not meaningful reduction in consolidated capital expenditure (capex) following the deconsolidation. This is because it estimates that 5G investments will normalize in the future, given those already undertaken and STC's focus will increasingly shift to investments in digital services, resulting in a more asset-light business. In S&P’s view, STC will likely redeploy a large portion of the sale proceeds into its operations over time to develop various noncore services. "Therefore, they assume only a temporary, but not sustainable, increase in cash balances, while a significant increase in profits from non-telecom businesses will take several years to materialize." The ratings agency profit contribution from non-telecom services could gradually increase to about 20% over the next three years, from an estimated 10%-15% currently. (Writing by Brinda Darasha; editing by Seban Scaria) brinda.darasha@lseg.com

Saudi PIF's offer for 51% tower stake is credit neutral for Saudi Telecom - S&P

DISCOVER MORE

Dubai's DEPA posts higher revenue for 2022 on post-COVID recovery

China stocks fall as rising Sino-U.S. tensions dent sentiment

UAE exchange firm Al Ansari upsizes IPO on strong investor demand

Mideast Stocks: Most Gulf markets end lower as oil prices drop; Egypt up

Friday Outlook: Asian shares falter on banking concerns; dollar steady after Fed's rate pause hints

US Stocks: Wall St ends higher as Yellen vows actions to safeguard deposits

Yellen tries to assuage investor fears as bank stocks slide

Dealmakers expect pick-up in activity despite 'brick wall' facing M&A

GCC central banks track US Fed move; hike key rates by 25bps

VIDEO: LSE-listing will facilitate more funding opportunities for us, Dar Global CEO

Dubai's Meraas to build new residential towers in Design District

Abu Dhabi's Mubadala, Ares set up $1bln JV to invest in credit secondaries

Egypt to get $7bln in funding as World Bank approves new development framework

Saudi: Arriyadh Development declares lower profits in 2022, dividends proposal

Egypt: E-finance announces dividend for 2022

Saudi: Aldawaa Medical Services unveils 28% higher profits in 2022, dividends for H2-22

Saudi Airlines Catering’s net profits skyrocket 1,729% in 2022

Saudi: Tabuk Cement generates 18% higher profits in 2022

LATEST VIDEO

VIDEO: LSE-listing will facilitate more funding opportunities for us, Dar Global CEO

ZAWYA COVERAGE

Dubai's DEPA posts higher revenue for 2022 on post-COVID recovery

UAE exchange firm Al Ansari upsizes IPO on strong investor demand

Dubai's Emirates expands training fleet with $4.3mln aircraft order

2 African development banks invest $16bln in oil, gas projects

Dollar's smile looks a little lopsided: Mike Dolan

'I was on the brink of a heart attack': How smartwatch saved UAE resident's life

Can you walk 1 billion steps? Dubai authority announces new challenge for Ramadan

China's says it again drove away U.S. warship in South China Sea

Philippines, China say to address maritime issues peacefully

THE BRI REPORT

China is reshaping the Belt and Road Initiative ahead of a post-pandemic era

DISCOVER MORE

LATEST VIDEO

ZAWYA NEWSLETTERS

ZAWYA COVERAGE