2024 Digital Infrastructure M&A in the Middle East – FTI Consulting
The telecommunications landscape in the Middle East is rapidly changing, with a surge in TowerCo penetration leading to a flurry of passive infrastructure M&A activity. This transformation has taken place over just a few years, making the region one of the most dynamic globally for tower infrastructure deals.
Unlike in other parts of the world, mobile network operators in the Middle East initially hesitated to monetize their tower assets. With healthy financial standings, they did not feel pressured to pursue tower sale-leaseback agreements. However, as operators evolve to offer more than just connectivity, there is a growing recognition of the value in sharing passive infrastructure assets like towers.
One notable trend in the Middle East is the dominance of captive TowerCos established by MNOs. STC’s TAWAL, for example, was created with the goal of becoming a regional leader with global ambitions. In a strategic move, STC shareholders recently approved PIF’s acquisition of a majority stake in TAWAL, consolidating the market in Saudi Arabia. Similarly, Zain Group and Ooredoo Group have joined forces to create a TowerCo JV called “New TASC” Towers, operating in six countries across MENA.
The landscape in Oman presents an interesting opportunity for tower transactions, as Ooredoo Oman looks to monetize its towers independently. This decision could attract interest from other players in the market, given the absence of Ooredoo Oman from the larger TowerCo deals in the region.
While most operators in the Middle East have opted for captive TowerCos, there have been some exceptions, such as Omantel and Zain Kuwait selling their towers to external companies. These transactions occurred prior to the formation of major TowerCos in the region and highlight the shifting dynamics of the industry.
Overall, the Middle East’s telecom sector is witnessing significant changes, driven by the increasing desire for cost optimization, operational efficiencies, and strategic growth opportunities. As operators continue to adapt to new market conditions, we can expect to see further developments in the digital infrastructure M&A landscape in the coming years.
