Riyadh – Mubasher: Saudi Zain announced that the tower sales deal with IHS Holding has been cancelled, as HIS Global Limited, the buyer, was not able to fulfil the regulatory requirements.

“We have received a letter from the Communications and Information Technology Commission (CITC) indicating that IHS Holding Limited did not fulfil the regulatory requirements pertaining to the sale and leaseback of the passive towers infrastructure,” Aljazira Capital said in a report on Tuesday, citing the company's statement.

The sales deal included sales of roughly 8,100 passive towers and the building of an additional 1,500 towers over a 6-year period.

The Saudi telecom company intended to re-lease the tower, for a 15-year period with an option to extend, according to the report.

Completing the deal was expected to attract an immediate inflow of approximately SAR 2.5 billion.

Zain intended to use the inflow to repay a part of its debt burden of SAR 10.4 billion from commercial banks, which would have had a multi-facet impact on the company.

“Towers sales would have resulted in lower Commercial debt of SAR 7.9 billion, which would have resulted in lower finance cost of SR 791 million. In addition, if the company is also able to re-negotiate its loans due to the lower debt burden a 50bps decline in lending rates would have resulted in finance cost of SAR 719.9 million,” the report highlighted.

Cancelling the deal will have an impact on the intended rights issue of the company.

Aljazira Capital maintained the target price of Zain’s stock at SAR 11.5 while confirming “Neutral ”recommendation.