Telecommunications giants Ooredoo, Zain, and passive infrastructure specialist TASC Towers are currently involved in a high-stakes negotiation. Their objective? Forming arguably the most expansive mobile towers firm across the Middle East and North Africa.
Compellingly, these entities are focusing exclusively on this negotiation, aiming to amalgamate their tower assets based in Qatar, Kuwait, Algeria, Tunisia, Iraq, and Jordan into a mutual, autonomous towers company. With a solid objective, the entities anticipate reaching a decisive deal by the end of this current quarter.
With regulatory conditions met and terms agreed upon, the emerging entity could boast an impressive portfolio of approximately 30,000 towers across these six markets. This figure holds magnitude when compared to noted market leader TAWAL, who sustains just over half of this number solely in the Saudi Arabian market, despite a recent expansion into Pakistan.
The Ooredoo-Zain-TASC conglomerate would be observably larger, potentially redefining the market’s competitive landscape. While this operation wouldn’t quite exceed the scale of American Tower or Cellnex, it’s worth noting that it’s not drastically behind IHS Towers, a company possessing just over 39,000 towers — most located beyond the MENA region.
In a strategic move, Ooredoo, Zain, and TASC refrain from revealing the valuation of the formidable entity in this preliminary stage of the negotiation. What’s known at this point is that they’re committed to orchestrating a cash-and-stock deal.
The rationale behind this deal echoes similar transactions occurring across the globe. Both Ooredoo and Zain have an aligned focus on stimulating shareholder value through implementing a more resourceful capital structure. Central to their strategy is the unifying aim to diminish carbon footprint within the MENA region.
Interestingly, their focus on capitalising on potentially valuable assets aligns with the efforts of their global peers. However, they stand out with their incorporation of various green initiatives.
At present, the towers industry is becoming a ground for various opportunities and challenges. The predictable, long-term returns coupled with immense space for growth make it a desirable sector for investors. However, the elevating costs involved in owning, operating, and building towers pose significant challenges as companies struggle with economic volatility and soaring capital costs.
Yet, this proposed transaction introduces an innovative approach to these challenges: building scale by amalgamating tower operations.
Despite minimal information on the deal, it’s clear that the transaction is perceived as judicious. Ooredoo and Zain, currently expanding their 5G technology across various markets will undeniably benefit from this venture, given the substantial capital intensity required for a new generation of mobile technology. Consequently, this new deal proves to be a strategic way to liberate capital from towers.
