Zain Saudi weighs sale or joint ownership of towers

Telecoms operators are increasingly keen to dispose of towers that now provide little competitive advantage due to broadly similar network quality and coverage, although no such deals have been completed in the Middle East.

Telecommunications firm Zain Saudi is considering joint ownership or a sale of its mobile transmitter towers, its chief executive said on Wednesday.

Telecoms operators are increasingly keen to dispose of towers that now provide little competitive advantage due to broadly similar network quality and coverage, although no such deals have been completed in the Middle East.

The comments from Hassan Kabbani follow a report by Saudi financial news website Maaal last month that Zain Saudi, along with the kingdom’s two other telecom operators, Etihad Etisalat and Saudi Telecom, were in talks to establish a company that would share ownership of their towers.

“We hear like you hear that our competitors are also considering this,” Mr Kabbani told reporters on the sidelines of a conference. “Many tower companies are very much interested by the Saudi market for this kind of activity.”

Citing sources familiar with the matter, Reuters reported on March 16 that Kuwait’s Zain, Zain Saudi’s parent company, was narrowing the field of potential bidders for its towers in Saudi Arabia and Kuwait. Proceeds from any sale of Zain Saudi’s 7,000 towers would be used to pay off some debt, the sources said.

Selling towers can also allow operators to reduce their capital and operating costs.

Mr Kabbani did not say whether joint ownership or a sale was more likely for the company’s towers, but said both options were under consideration.

“I cannot talk about where we are on that potential activity, but can tell you that we are considering this as one option,” he said.

“All operators are considering tower sales because the network has reached a level of maturity. Most operators are sitting on passive assets so maybe if they sell these assets, they can be optimised.”

Under a joint ownership arrangement, tower companies usually buy towers from one operator and then attract others as tenants.

Such a move has been particularly popular in Africa, where operators face high costs in powering generator-run towers, sites are tough to access due to poor transport links and phone use and coverage are relatively low and so there is significant market growth potential.

The benefits are likely to be more modest in Saudi Arabia, where mobile penetration is already 180 per cent, the sixth-highest globally.

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