Etihad Etisalat Co. is reviewing offers for its tower business as the Saudi Arabian telecommunications company seeks to become profitable, Chief Executive Officer Ahmad Farroukh said.
"We received certain indicative offers," Farroukh said in an interview in Riyadh on Thursday. "If the deal is good for our shareholders, for sure I’ll bring it on the table."
The second-biggest telecommunication provider in Saudi Arabia is one of several seeking to sell towers as network quality becomes similar across different operators. Digital Bridge Holdings is among the leading bidders for Etihad Etisalat’s tower portfolio, which could fetch as much as $2 billion, according to people with knowledge of the matter. The company owns about 10,000 towers in the oil-rich kingdom.
Saudi news website Maaal reported in February that "high-level negotiations" were happening to create a company to own the towers of all three telecommunication providers in the kingdom, including Saudi Telecom Co. Zain Saudi Arabia is assessing several options for its towers, including selling them for cash and leasing them back or working with competitors to create one tower company, CEO Hassan Kabbani said last week.
While Etihad Etisalat, also known as Mobily, isn’t "after a deal for the sake of a deal" the company is keen to sell the towers as they are "not our core business," Farroukh said. "It’s a complicated thing. You have to go to each and every of our 10,000 sites, negotiate the rent with 10,000 landlords and have the consent for them to move to the new tower company."
The kingdom’s other two operators, Zain Saudi Arabia and Saudi Telecom Co., are also "thinking of the same," he said.
The shares of Mobily climbed 3.7 percent in Riyadh today, bringing their gain for this year to 4.5 percent. That compares with a drop of 9.3 percent for Saudi Arabia’s benchmark stock index.
Return to profitability
Mobily, 27 percent owned by Abu Dhabi’s Emirates Telecommunications Group, is recovering from accounting irregularities discovered more than a year ago that cost the company its CEO and billions in market value. The company reported its first quarterly profit in the fourth quarter after four consecutive period of losses.
Mobily aims to become profitable again this year, although all telecommunication companies are facing an unexpected challenge from a regulatory requirement to take fingerprints from customers, Farroukh said. The requirement, instituted in January, "in a way limits your growth," he said. "It’s a learning curve and we’re hoping there will be extensions, but we’re working 24/7."
The company is still waiting to hear the results of a Capital Markets Authority investigation into the accounting regularities, Farroukh said.