Zain, Ooredoo, and TASC Towers Merge
Telecom Tower Assets in $2.2 Billion Deal
Three leading telecom service providers in the Gulf region Kuwait's Zain Group, Qatar-based Ooredoo, and Dubai's TASC Towers Holding signed Tuesday a major merger deal to combine their tower assets into a $2.2 billion (KWD 680 million) entity.
Towers merger
The new entity will have an estimated enterprise value of $2.2 billion through an "asset and cash equalization process" between Zain and Ooredoo that would give both companies a 49.3% share, according to a regulatory filing on Boursa Kuwait.
TASC's founders will retain the rest through Digital Infrastructure Assets LLP and will continue to manage the operations, Ooredoo said in a statement Tuesday.
Both Ooredoo and Zain will retain their respective active infrastructure, including wireless communication antennas, intelligent software, and intellectual property concerning managing their telecom networks, added the statement.
The transaction will be completed in 2024, subject to regulatory approvals.
The merger, which combines about 30,000 tower assets in Qatar, Kuwait, Algeria, Tunisia, Iraq, and Jordan, was first announced in July.
Ooredoo, which ranks fourth on Forbes Middle East's list of Sustainability Leaders, said the towering entity is expected to achieve run-rate revenues close to $500 million annually, with earnings before interest, taxes, depreciation, amortization and special losses (EBITDAaL) of more than $200 million per annum upon the completion of closings in all individual countries.
Zain Group, which ranks third on Forbes Middle East's Sustainability Leaders list, said the transaction would have a positive impact on its operational growth, but it could not determine the financial impact at this stage.
As of 1:00 pm GST Tuesday, shares of Ooredoo and Zain Group traded in the green, with gains of 1.1% and 0.2%, respectively.
However, Omani Qatari Telecommunications Company's (Ooredoo Oman) towers in the country are expected to follow "a stand-alone process, separate from this joint venture," the telecom services provider said in July.
Crucial quote
"(The deal) positions the region as an advanced player in the global telecoms landscape, and we anticipate wide-ranging positive implications for the region – from economic growth and upgraded connectivity to technological improvements and increased global relevance," Aziz Aluthman Fakhroo, managing director and group CEO of Ooredoo, Bader Al-Kharafi, Zain vice-chairman and group CEO, and Iyad Mazhar, founder & CEO of TASC, said in a joint commentary.
Divesting infrastructure assets
Gulf telecom service providers have been divesting their tower assets to reduce infrastructure costs and concentrate on information and communications technology (ICT), with specialized tower operators getting attracted to new and high-growth markets.
In January, Zain KSA, which ranks 79th on Forbes Middle East's Top 100 Listed Companies 2023, sold 8,069 towers to Saudi Arabia's sovereign Public Investment Fund (PIF) for approximately $800 million. In 2020, Zain Kuwait sold 1,620 telecom towers to IHS Holding for $130 million.
Saudi telecom operator stc also spun off in 2019 over 15,000 towers into a subsidiary named Tawal. The Saudi company, which is majority owned by the PIF, ranks 11th on Forbes Middle East's Top 100 Listed Companies 2023.
Last year, Omantel sold 2,890 towers to Helios Towers for $575 million. The telecom company ranks 51st on Forbes Middle East's Top 100 Listed Companies 2023 list.