Kuwaiti Zain expects to finalize Saudi tower sale in H1- 2017

Kuwaiti telecoms group Zain expects to sell its mobile transmitter towers in Saudi Arabia for more than $500 million in the first half of 2017, its chief executive said.

Zain, which operates in eight countries in the Middle East and Africa, has been exploring the sale of its towers in some of its markets since as early as January 2015.

“We’re down to two bidders,” Group Chief Executive Scott Gegenheimer told Reuters in an interview in Dubai, adding the deal is to likely to be finalised “sometime in the next two quarters”.

Zain Saudi 7030.SE, which has not made a quarterly profit since it started operations in 2008, plans to use the proceeds of the sale of part or all of its 7,776 towers to pay down its debt and for data-focused investments, Gegenheimer said.

Zain Saudi is Saudi Arabia’s No.3 telco operator by revenue and 37 percent owned by Zain Group.

Its competitors Saudi Telecom Co 7010.SE (STC) and Etihad Etisalat 7020.SE (Mobily) are studying whether to sell or merge their towers to cut costs.

Gegenheimer said Zain Saudi is “probably looking at 2018 for profitability”, adding that wide-ranging changes in Saudi Arabia, including cuts to public sector wages, have been “challenging” for the operator.

Saudi’s Communications and Information Technology Commission (CITC) regulator granted Zain Saudi a unified licence last month, extending its operating license by 15 years and ending the fixed-line monopoly of STC.

Zain Saudi said on Oct. 12 it had signed letter of intent with a unit of utility Saudi Electricity Co 5110.SE (SEC) to use SEC’s fiber optic network, conduct mutual marketing of products and services, and obtain new locations for telecommunications towers.

Gegenheimer said Zain Saudi would likely start introducing new services in the first half of 2017.

“It’s great news,” he said. “Long term, it definitely gives us new revenue streams as we become a fully integrated services provider.”

The Group is also looking to make investments in e-commerce and mobile advertising as part of a strategy to increase revenue through technology investment in parallel industries.

“Sometime soon we will have an announcement on an OTTv (over-the-top video) partnership,” Gegenheimer said.

OTTv is internet streaming video content that is usually from a third party.

Source: Reuters