Mobily and STC in joint tower study

Mobily and STC announce deal to explore options for sale of their network towers.

Etihad Etisalat (Mobily), the Saudi Arabian telecom operator and Saudi Telecom Co (STC) have announced a deal to jointly explore options for their network of transmitter towers.

Mobily, STC and Zain Saudi Arabia, have been considering sales of their towers to cut costs, although other options have also been considered.

Increased competition, difficulties in foreign markets and changing technologies and customer behavior are taking their toll on the mobile sector’s competitivity.

The prospective deal between STC and Mobily, respectively the largest and second-largest operators in Saudi Arabia, aims at ‘extracting value’ from their respective towers with the end game of reducing capital and operating expenditures on the portfolio, they said in separate bourse statements.

The memorandum of understanding is valid for three months from July 31 and can be extended for 30-day periods as long as both parties’ consent.

The statements did not detail how a potential plan for the towers could be structured, and while neither mentioned Zain Saudi by name, both said it might include other licensed operators.

All three have been facing challenges to their profitability as a mixture of competition, difficulties in foreign markets and changing technologies and customer behaviour have weighed.

Mobily is recovering from an accountancy scandal which originated from the premature booking of revenue from wholesale broadband leases and mobile promotional campaigns and forced it to restate 27 months of profits to March 31, 2015, by a cumulative 3.63 billion riyals.

STC has reported falling profits in seven of the last eight quarters, its latest being a 27.1 percent fall in second-quarter profit last week. Zain Saudi has not made a quarterly profit since launching services in 2008.



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