Saudi Telecom Co. plans to spin off its data center, submarine cables and points-of-presence assets into a new firm as the Middle East’s most profitable network operator diversifies into new areas.
Saudi Telecom, controlled by the kingdom’s sovereign wealth fund, already spun off its internet services unit and listed it on the kingdom’s stock market last year. The firm is also building out its digital bank, STC Pay, and was an investor in a $500 million venture capital fund launched in 2017.
Carving out assets into new units are one way to monetize them through potential listings on the stock markets or selling a stake to other investors.
Other examples of recent spin-offs in the Middle East include state-controlled Abu Dhabi National Oil Co. listing its oil distribution and drilling units in the emirate’s stock market.
Countries across the Middle East are stepping up efforts to sell shares in companies and boost liquidity on their stock markets, with Saudi Arabia, Abu Dhabi and Dubai at the forefront.
From Saudi Telecom announcement:
- New firm’s initial capital will be 100 million riyals
- Initial valuation of assets at about 2.1 billion riyals as of Dec. 2021
- New company is expected to inject 1.7 billion riyals as additional investment, bringing total investment to 3.8 billion riyals
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