Qatar’s Ooredoo, Zain and TASC to create $2.2bn tower company

Qatar’s Ooredoo, Kuwait-based Zain Group and UAE’s TASC Towers Holding have signed definitive agreements to combine to merge their portfolio of about 30,000 cellular towers into a $2.2bn entity – the Middle East and North Africa’s largest tower operator.

Ooredoo and Zain take 49.3 per cent each in the merged entity, through an asset and cash equalisation process. The founders of TASC will retain the remaining shareholding and will continue to manage the operations of the business.

The deal is expected to be completed in 2024 subject to all necessary regulatory approvals.

The newly created tower entity is expected to achieve run-rate revenues close to $500m per year, with an EBITDAal (after leases) of more than $200m.

“This strategic transaction will unlock significant shareholder value through higher earnings multiples, as well as ensure capital efficiency, optimising balance sheets for our respective companies and creating new possibilities for investors,” executives from the three companies said.

“The deal also demonstrates our joint dedication to supporting the reduction of the region’s carbon footprint, contributing to our vision of reshaping the telecommunications sector by building a more sustainable ecosystem and ensuring a better-connected future for our communities across the region.”

Ooredoo و”زين” تنهيان صفقة استحواذ ودمج أبراج بقيمة 2.2 مليار دولار

الصفقة سينجم عنها إطلاق أكبر شركة أبراج في أسواق الشرق الأوسط وشمال أفريقياhttps://t.co/9rfOKjsQKU pic.twitter.com/XVGe2fusw7

— Zain Group (@Zain) December 5, 2023

As an independent tower company, leveraging the combined assets of Ooredoo and Zain, TASC will offer Passive Infrastructure as a Service (PIaaS) in a partnership model.

The consolidation is expected to create unprecedented opportunities for all mobile network operators, offering a capital-efficient alternative to building, owning and managing their passive infrastructure in a cost-efficient and environmentally friendly manner.

The three entities said this financial position underpins the promising prospects and profitability of the newly restructured tower company.

Zain said the transaction would have a positive impact on its operational growth, but it could not determine the financial impact at this stage.

The Gulf telecom companies said the partnership model is well-equipped to meet the needs of other mobile network operators seeking to reduce costs, lower carbon emissions, and address the increasing demand for sites driven by double-digit growth in mobile data consumption across the region.

Ooredoo and Zain will retain their respective active infrastructure, including wireless communication antennas, intelligent software, and intellectual property.

The Qatari telecom giant’s tower network in Oman will follow a stand-alone process.

Ooredoo, Zain and TASC leverage tower assets

Meanwhile, GCC telecoms companies have been divesting from tower assets to reduce infrastructure costs and focus on information and communications technology, with such deals attracting specialised tower operators looking to enter new, high-growth markets.

Zain Saudi Arabia sold 8,069 towers to Saudi Arabia’s sovereign fund Public Investment Fund for about $807m (SAR3.02bn) in February 2022 while Omantel, in 2021, sold 2,890 towers to Helios Towers for $575m.

The Kuwaiti telecoms giant offloaded 1,620 towers to IHS Holding for $130m in 2020. In January, Zain’s Iraqi unit entered into a definite 15-year agreement to sell and lease back 4,968 towers to TASC Towers Iraq for $180m.

Meanwhile, Qatar’s Ooredoo unveiled plans to carve out its portfolio of almost 20,000 towers in September 2022 and the assets are estimated to be valued between $3bn to $5bn.

Read: Zain Group creates global wholesale services JV with Omantel