With the spin off, STC becomes the latest telco to seek to monetise its existing infrastructure assets
Today, Saudi Telecom Company (STC) has announced that it will separate its data centre, submarine cable, and points-of-presence assets into a new unit, seeking to capitalise on the current surge of investor interest in telecoms infrastructure.
The new company’s assets would reportedly have an initial valuation of roughly $560 million, with STC set to invest a further $450 million in the near future.
This news follows an announcement from STC in November last year that the company is preparing to invest $400 million into new data centre, adding to their existing 16 data centres situated in six cities across the country.
STC has seen great success when it comes to spinning off valuable units in recent years, having done the same with its internet services business, Solutions by STC, just last year. The company’s initial public offering (IPO) on the TASL, Saudi Arabia’s main stock index, soon followed, raising $930 million. In fact, investor bids for the available shares surpassed those available by 130 times, with Bloomberg reporting that the IPO attracted more orders than that of oil and gas giant Saudi Aramco, one of the largest companies in the world.
At the end of last year, Solutions by STC was valued at over $6.4 billion.
Saudi Arabia’s information and communications technology industry is set to grow to $14.15 billion by 2025, according to STC themselves. The industry represents a key component of the Saudi government’s Vision 2030 framework, which seeks to digitalise and diversify the country’s economy, ultimately helping to reduce the nation’s reliance on oil.
In fact, just yesterday the Saudi minister of communication and information technology, Abdullah Alswaha, announced $6.4 billion in investments for future technologies. This includes a $2 billion joint venture between EWTP Arabia Capital, a fund backed by the Saudi Arabian public investment fund, Alibaba and the Chinese group J&T Express; a $1 billion investment from Aramco into start-ups via its Prosperity7 Ventures fund; and the near $1 billion commitment by STC themselves to further develop their submarine cable and data centre infrastructure.
"Right now, the tech and digital market in the kingdom is around $40 billion which is the largest by far in the region. We’re very proud of the growth that we have seen in the region, specifically in areas around e-commerce, gaming, digital content and cloud," said Alswaha, speaking to Reuters.
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