stc, PIF sign agreement to establish IoT firm
Saudi stc signed a joint venture (JV) agreement with the Public Investment Fund (PIF) to establish a limited liability company in the field of Internet of Things (IoT).
The new company’s business is in line with the expected growth and increasing demand for IoT services and products.
It aligns with stc’s growth strategy and Vision 2030 for a connected nation. The new company will be headquartered in Saudi.
The new company will have a capital of SAR 492 million and will be equally owned by stc and PIF.
stc will finance its share of investment of SAR 246 million from its internal resources.
Potential capital increase
stc stated that the agreement allows the possibility of increasing the new company’s capital up to SAR 900 million, if required.
This will be dependent on the new firm’s business requirements at the end of the third financial year from the establishment date.
However, the capital increase will be subject to competent authorities and regulatory approvals.
The new company is expected to have a positive overall financial impact on stc.
The expected total capital injection will be in accordance with stc and PIF proportionate ownership in the new company’s capital.
Whether the parties can proceed as planned is dependent on obtaining necessary regulatory approvals. The establishment of the new company will also depend on the satisfactory completion of the conditions in the JV agreement, and the commencement of its commercial operation.
Therefore, the transaction will be subject to approval from stc’s general assembly. The approval will be scheduled later under the relevant laws and regulations.
The PIF is considered a related party since it is the largest shareholder in stc, with a 64 percent stake.
On March 20, Moody’s, a bond credit rating company, affirmed the ratings of the telecom company at “A1”, with a “stable” outlook.