Three buyers are set to emerge as bidders for a stake in a potentially combined STC/Mobily tower company, according to a Reuters report citing three sources.
If the proposed merger – reportedly worth some US$2.5bn – were to go ahead, the companies would…
Three buyers are set to emerge as bidders for a stake in a potentially combined STC/Mobily tower company, according to a Reuters report citing three sources.
If the proposed merger – reportedly worth some US$2.5bn – were to go ahead, the companies would consider selling a 49% or 51% stake to suitors likely to include three infrastructure/sponsor duos: Indian towerco GTL and UAE sovereign wealth fund Mubadala; Swedish equipment vendor Ericsson and Saudi private equity firm Abraaj Capital; and Indian infrastructure group SREI (which owns Quippo) and Saudi-based investment company Zamil Group.
STC, advised by Morgan Stanley, has been looking to sell its towers for quite some time, in an off-and-on process that has seen GTL and Quippo rotated as the most likely buyers. It is possible that the recent quiet period was due to a re-jigging of that towers deal to include Mobily, especially as people familiar with the situation had told TelecomFinance “all options were under consideration” by STC.
GTL is advised by Standard Chartered.
Some TelecomFinance sources have said the Saudi towers market is not attractive owing to high prices, the scarcity of potential tower tenants and a general lack of acceptance when it comes to selling infrastructure, so a combined offering might resolve some of these issues.
According to one dealmaker active in the region, working together, STC and Mobily could derive synergy benefits by combining tower operations before a sale. This would make the deal less financially attractive to buyers, but would save them the effort of convincing others in the market that the deal made sense.
Regional analysts were cited suggesting that regulators might force STC and Mobily, the Saudi subsidiary of Etisalat, to allow distant number three player Zain into the alliance in order to ensure that the market remained fair for all.
Zain’s 25% stake in its Saudi Arabian business is currently on the block, since its sale is one of the key conditions for Etisalat’s agreed acquisition of its Kuwait-based rival.
