Saudi Telecom plans $1 billion hosting and connectivity newco

Saudi Telecom plans $1 billion hosting and connectivity newco


Saudi Telecom is to establish a $1 billion (SAR3.8 billion) connectivity company specialising in data centre hosting as well as international and regional connectivity.

STC will transfer its infrastructure assets – inclusive of its data centres, international submarine cables and international points of presence – to the new company, which will have an initial valuation of approximately SAR2.1 billion, based on asset values as of December 2021.

On the financial details, STC confirmed the SAR3.8 billion value comprises this SAR2.1 billion asset valuation, alongside a SAR100 million injection of initial capital and SAR1.7 billion in expected additional investments.

A statement from STC read: "These assets and investments will be subject to a detailed evaluation at a later stage in order to determine their final valuation, in addition to determining the final capital needed for the new company upon completion of the necessary regulatory requirements."

The news follows $966 million IPO of Solutions by STC last year, executed to capture the growth opportunities in both the public and private sectors, as well as smart cities and cloud-first policies.

However, there are no plans reported – as yet – to list this company, in whole or part. It is described as being fully owned by STC and it will "manage and continue to invest" in submarine cables, including new submarine projects. Google's Raman cable and 2Africa both have landings planned in the kingdom.

Although data centres are central to the newco's remit, the details of how many facilities or the investment they could require, have yet to be released.

That said, there has been plenty of data centre news from the kingdom over recent months.

As Capacity reported in July of last year, the Ministry of Communications and Information Technology (MCIT) is calling for $18 billion investment in hyperscale data centres by 2030, to take nation-wide capacity to more than 1.3GW.

Then in October, STC announced multi-million dollar data centre contracts for NEOM following its appointment to deliver an “advanced 5G and IoT network” for the smart city. Quantum security company Arqit has won a deal to provide security for the same project.  

In November, STC said it was planning the "largest cloud-enabled data centre in the region".

The new company aligns with Saudi Arabia's ambitions to create a regional digital hub with high-capacity links to other regions, specifically connecting Asia, Africa and Europe – however this is not the only project that will help it achieve this goal.

The next issue of Capacity magazine, out in March, will carry more details on this.

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