The Saudi Arabia unit of Kuwait-based Zain Group has agreed to sell and lease back more than 8,100 mobile telecommunications towers to Nigeria-headquartered IHS Holding Limited (IHS) for an estimated 2.52 billion Saudi Riyal ($672 million).

The final value of the transaction is approximately SR90 million higher than the initial agreement made in November last year.

Telecom towers Saudi Arabia

The agreement entails the sale of the infrastructure of 8,100 towers with a leaseback period of 15 years and a five-year renewal option. It also includes the construction of an additional 1,500 new towers over the next six years, Zain said in a statement.

MEED first reported about the planned sale in 2016, with the US’ Citigroup thought to be advising Zain on the transaction.

Under the terms of the agreement, Zain KSA is selling “only its passive, physical infrastructure to IHS and will retain its intelligent software, technology and intellectual property with respect to managing its network.”

According to Zain, sales proceeds will be used to reduce its Murabaha financing and overall funding burdens.

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By GlobalData

It reported a net profit of SR332 million in 2018, boosted by a 5 per cent reduction in government royalty fees.

Over the past decade, many telecoms operators across the region and internationally have opted to sell their passive mobile towers in a bid to reduce costs and boost revenues.

Firms like IHS buys towers from telecoms companies and leases transmission capacity to telecoms operators.

This article is sourced from Verdict Technology sister publication, a leading source of high-value business intelligence and economic analysis about the Middle East and North Africa. To access more MEED content register for the 30-day Free Guest User Programme.