Saudi Telecom Company (stc), Saudi Arabia’s largest wireless carrier and fixed broadband provider, today announced its plans to separate its data centers, subsea cables, and international points-of-presence (PoPs) into a vehicle labeled “the new company” (NewCo), as part of a total investment of $1.01bn USD (3.8 billion Saudi riyals). Specifically, the formation of NewCo will involve the following two steps:

  1. Transfer: data centers, subsea cables, and international PoPs contributed by stc to NewCo, at an initial valuation, as of December 2021, of $560m USD (2.1 billion Saudi riyals)
  2. Investment: NewCo to fund a capital injection of $453m USD (1.7 billion Saudi riyals) as an incremental investment

Additionally, stc notes that these assets and investment figures are subject to further evaluation, in order to determine their “final valuation”.

Data Centers, Subsea Cables – Saudi Telecom (stc)

NewCo will be headquartered in the Kingdom of Saudi Arabia with the directive to manage and invest in both existing and new data centers and subsea cables. Geographically, these investments will be made in the Kingdom of Saudi Arabia and “the region”.

Data Centers

In November 2021, stc revealed plans to invest $400m USD (1.5 billion Saudi riyals) to expand its data center presence in Saudi Arabia by 125 megawatts of power capacity and 1.9 million sqft (180k sqm). As part of these plans, stc targeted the delivery of 16 data centers with 17k server racks. Specifically, stc will build these facilities in major cities of Saudi Arabia including Riyadh, Jeddah, and Dammam.

Cloud Service Providers

Cloud service providers such as Oracle Cloud, Google Cloud, and Huawei Cloud are opening new cloud regions in Saudi Arabia. Indeed, these customers are a key demand driver of capacity for third-party data center operators like stc. Below are further details on Oracle Cloud, Google Cloud, and Huawei Cloud’s presence and plans in Saudi Arabia:

  • Oracle Cloud: operates one zone, through its Saudi Arabia region, in Riyadh. Also, Oracle Cloud is planning to open one zone, through its Saudi Arabia West region, in Jeddah
  • Google Cloud: planning to open three zones in Dammam, Saudi Arabia, which is an important location given its proximity to several subsea cables
  • Huawei Cloud: planning to launch a cloud region in Saudi Arabia and signed an agreement with stc to develop data centers in-partnership together

Subsea Cables

stc has not disclosed which of its subsea cable assets that it will contribute to NewCo. Nevertheless, Dgtl Infra highlights select subsea cables which stc has an ownership stake in, primarily as a consortium partner, that it could contribute to NewCo:

  • 2Africa: spans 28k+ miles (45k+ kilometers), including the PEARLS Branch, connecting Africa, Europe, and Asia
  • I-ME-WE (India-Middle East-Western Europe): spans 8.1k miles (13.0k kilometers), connecting Egypt, France, India, Italy, Lebanon, Pakistan, Saudi Arabia, and the United Arab Emirates (UAE)
  • Eastern Africa Submarine Cable System (EASSy): spans 6.2k miles (9.9k kilometers), connecting Comoros, Kenya, Madagascar, Mozambique, Somalia, South Africa, Sudan, and Tanzania
  • Europe India Gateway: 9.3k miles (15.0k kilometers), with multiple points of connectivity in Europe, the Middle East, and India
  • SEA-ME-WE 4: 11.7k miles (18.8k kilometers), with multiple points of connectivity in Europe, the Middle East, and India
  • SEA-ME-WE 5: 12.4k miles (20.0k kilometers), with multiple points of connectivity in Europe, the Middle East, and India

Additionally, stc points to investment opportunities in new subsea cables landing in multiple points of Saudi Arabia. For example, one planned subsea cable connecting to the Kingdom is the Trans Europe Asia System (TEAS), which will land in Ras Al Khair, Saudi Arabia.

Initial Capital

NewCo’s initial capital will be $26.6m USD (100 million Saudi riyals) and stc will have 100% ownership. Also, stc will finance this investment from its own resources.

Mary Zhang covers Data Centers for Dgtl Infra, including Equinix (NASDAQ: EQIX), Digital Realty (NYSE: DLR), CyrusOne, CoreSite Realty, QTS Realty, Switch Inc, Iron Mountain (NYSE: IRM), Cyxtera (NASDAQ: CYXT), and many more. Within Data Centers, Mary focuses on the sub-sectors of hyperscale, enterprise / colocation, cloud service providers, and edge computing.

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