Ooredoo, Zain and TASC's $2.2bn towerco is here
Ooredoo, Zain and TASC Towers finalise the largest tower deal in MENA with 30,000 sites
TASC Towers, Kuwaiti-based Zain Group and Qatar-based Ooredoo have announced the signing of an agreement to create the largest tower company in MENA. Find out more in person at TowerXchange Meetup MENA this February 7-8 in Dubai. A deeper analysis will follow later this week, but here’s what we know so far:
The cash and share deal covers just under 30,000 towers across Qatar, Algeria, Tunisia, Kuwait, Jordan and Iraq, with a current estimated value of US$2.2bn.
Ooredoo and Zain will retain equal shareholdings of 49.3% through an asset and cash equalization process. TASC Towers will retain the remaining 1.4% through Digital Infrastructure Assets LLP and be responsible for delivering operational management.
Chairmanship of the new entity will rotate between both principal shareholders, starting with Bader Al-Khafari, Vice Chairman and CEO of Zain Group, and Aziz Aluthman Fakhroo, Board Member and CEO of Ooredoo, as Vice-Chairman.
The portfolio is expected to achieve run-rate revenues of around US$500mn annually with an EBITDA after leases of over US$200mn annually.
A brief backstory
This journey officially begun back in March last year, when at TowerXchange Meetup MENA 2022 Ooredoo announced a plan to review its passive infrastructure as part of an effort to unlock greater value from its network. However, TASC Towers origins in the region go back several years with a portfolio in Jordan.
By October this had evolved into a 6-market, 20,000-tower sale leaseback. Several other parties were understood to have been interested in the deal, in particular stc’s owned-owned towerco TAWAL who was also eyeing opportunities to expand in the region.
But in July this year it was announced that TASC Towers had come out on-top, in a uniquely structured deal that brought in TASC Towers’ partner MNO and majority shareholder Zain Group in to create a three-way MNO -towerco merge, the first of its kind.
TASC Towers inked out a transformative deal with Zain Group back in 2021, signing the first mulit-country sale and leaseback in MENAs across Zain’s markets in Jordan (which closed in 2022), Iraq (closing earlier this year) and Bahrain (which was likely put on hold to finalise this current deal).
What this means for the region
Since the first independent sale leaseback in MENA back in 2019 when Zain sold its Kuwaiti portfolio to IHS Towers, this latest deal brings towercos into half of MENA’s markets and owning nearly 30% of all towers.
In its press release, Zain emphasise the unprecedented opportunities towercos offer MNOs with a capital-efficient solution to building, operating and maintaining telecom tower networks in a way that improves efficiency to costs and emissions. As the first mover in the region, Zain has been an advocate for the towerco model for many years.
Ooredoo and Zain will be able to reap the benefits of better cost efficiency of their networks to redirect more capital towards their active networks as well as expanding on high growth verticals of the business.
With COP28 also wrapping up in Dubai this week, both MNOs have also taken major strides towards reducing the carbon footprint of their networks and creating a more sustainable business model.
The deal brings towercos into three new markets; Algeria, Qatar, and Tunisia, all of which have opportunities for further tower consolidation in their respective markets. In Kuwait, IHS Towers will see the arrival of a competitor, while TASC Towers further consolidates its position in Jordan and Iraq.
Oman remains as the main country left out as the Omani Telecommunications Regulatory Authority did not permit Ooredoo Oman’s towers to form part of the deal. However, these towers are understood to be part of a separate ongoing sale and leaseback.
Ooredoo has become the second multinational MNO in MENA to divest its tower infrastructure assets after Zain Group, the 3rd MNO to issue a sale leaseback after Omantel’s deal with Helios Towers in 2022, and the 4th MNO to divest its towers after stc carved out its portfolio to TAWAL in 2019.
With MNOs slowly but surely opening their doors to the idea of offloading their towers and shifting network strategy to infrastructure sharing, further M&A in existing and new tower markets is expected to be right around the corner.
In Saudi Arabia, Mobily is understood to be preparing a sale of its tower infrastructure to see a a fully consolidated tower market in the Kingdom, Egypt Telecom is reviewing bids for the first sale leaseback in North Africa, while Tunisie Telecom continues work on it’s carve-out.
Ooredoo, Zain and TASC Towers have a long road ahead as navigating the regulatory environments of 6 different markets, half of which are new to the tower model, which will no doubt be a demanding process. However, the deal turns the heat map of MENA tower activity up to the max, and TowerXchange Meetup MENA on 7-8 February is the perfect opportunity to meet the players in this fast-evolving region.
In their own words
In a joint statement, Aziz Aluthman Fakhroo and Bader Al-Kharafi and Iyad Mazhar, Founder & CEO of TASC Towers said, “This pioneering deal embarks us on an exciting journey together as it results in the establishment of the region’s largest independent tower company, placing the MENA region on the world telecom tower map.”
“It also positions the region as an advanced player in the global telecoms landscape, and we anticipate wide-ranging positive implications for the region – from economic growth and upgraded connectivity to technological improvements and increased global relevance.”
“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.
“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,” the CEOs concluded.”
The transaction is expected to be completed in 2024 and the phased implementation, tailored for each market and regulatory framework, is subject to approvals.
Join the region’s towercos and mobile operators at TowerXchange Meetup MENA this February 7-8 in Dubai.