Saudi's three mobile operators look to lower costs with new shared company

Etihad Etisalat (Mobily), Zain Saudi and Saudi Telecom Co are in talks to create company to manage mobile transmitter towers
Saudi's three mobile operators look to lower costs with new shared company
By Reuters
Thu 11 Feb 2016 09:28 AM

Saudi Arabia's three telecom operators are in talks to create a company to own and manage their mobile transmitter towers in a move that could cut costs and lower tariffs in the kingdom, a Saudi financial news website reported on Wednesday.

Etihad Etisalat (Mobily) in November said it was considering selling its towers, most likely to a tower company which would lease these back to the seller.

But Maaal, citing unidentified sources, said that Mobily along with Zain Saudi and former monopoly Saudi Telecom Co (STC) are in talks to establish a company that would share ownership of the trio's towers.

The newspaper said it was unclear whether the firms, which all did not immediately respond to requests for comment, would jointly own the new entity or if this would be sold to another party.

Tower companies typically buy towers from one operator and then attract others as tenants.

This has proved particularly beneficial 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.

Saudi Arabia's mobile penetration is 180 percent, the sixth-highest globally, so the benefits are likely to be less pronounced, although it should allow operators to reduce capital and operating costs.

Maaal said the deal would provide savings of up to 70 percent and enable the operators to cut tariffs.

Such reductions would help them fight back against low-cost, or often free, Internet-based calling applications, the newspaper claimed.

Valuing the thousands of assets involved makes tower deals complicated. Mobily and STC previously abandoned a similar tower asset merger.

For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.