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Wed 2 Feb 2011 05:54 PM

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Saudi telcos talk $2.5bn tower merger

Saudi firms would look at offloading a 51% stake if a joint business with 15,000 towers was created, source say

Saudi telcos talk $2.5bn tower merger
SAUDI TELECOM: State-owned Saudi Telecom, the countrys largest telecom, has around 11,500 towers (Image for illustrative purposes only)

Saudi Telecom Company

and competitor Mobily could sell a large

stake in a combined $2.5bn merged towers business, three

people familiar with the matter said on Wednesday.

"Talks for the merger are on, but this is subject to

negotiations and terms and conditions put forth by both

companies," one of the people said.

The person said the Saudi firms would look at offloading a

51 percent stake if a joint business with 15,000 towers was


Another person said the companies were undecided over

whether to sell 49 percent or 51 percent.

"We are not 100 percent sure that a majority stake sale is

going to be on the table," the second person said.

State-owned Saudi Telecom, the country's largest telecom,

has around 11,500 towers. Mobily, 26 percent owned by UAE group

Etisalat, has about 3,500 towers.

Infrastructure sharing gives companies access to equipment

without the heavy need for major capital investment.

Indian group GTL Infrastructure could bid for the

stake with Abu Dhabi investment fund Mubadala and would fund an

acquisition through a mix of debt and equity, the sources said.

Swedish company Ericsson would bid alongside

Saudi private equity firm Abraaj Capital and SREI Infrastructure
, the parent of Indian group Quippo, could form a third

bidding team with Zamil Group, the people said.

Mobily declined to comment. STC could not be reached for


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