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STC inks deal with Huwaei to build data centres in KSA

In addition, the agreement will contribute to the Kingdom's 2030 vision for diversifying its economy.

Saudi Telecom Company (STC) has signed a strategic agreement with China’s Huawei to set up local data centres in the Kingdom.

The deal plans to develop the data centres by setting up a factory, which will use Huawei’s global reach to establish national competencies in the Kingdom.

CEO of STC, Olayan Mohammed Al-Watied stated the possibility of setting up a data centre equipment factory increases the readiness of the digital infrastructure in the Kingdom, and boosts its position as a leading digital centre in the region.

STC has also announced that it will separate its data centre business into a new wholly-owned subsidiary. It intends to transfer its data centres, international submarine cables, and international points of presence assets to the new company valued at approximately SAR 2.1bn ($559.7m).

The new as-yet-unnamed company’s initial capital will be SAR 100m ($26.6m) and it will be 100% owned by STC. The telco said it expects to inject a further SAR 1.7bn ($453.1m) into the firm in additional investment in the future. STC hopes the move will draw more foreign investment into digital infrastructure in the kingdom.

In a statement, STC said: “The initiative to establish the new company will boost Saudi Arabia’s current position as the region’s digital hub and beyond, thru [sic] leveraging Saudi Arabia’s geographical location at the heart of the Middle East as a hub connecting Asia, Africa, and Europe. The new company will manage and continue to invest in submarine cables including new ones landing in multiple points of Saudi Arabia. It will also manage data centres and continue to invest in new ones across KSA and the region and other digital infrastructure to attract foreign direct investments and localise contents and cloud services to realise Saudi Arabia’s digitisation plans.”