By Anirban Sen, Supantha Mukherjee and Alexandra Alper
NEW YORK (Reuters) - Saudi Aramco (TADAWUL:2222)'s digital arm is in talks to take a significant minority stake in Mavenir, in a deal that is likely to value the U.S. telecommunications software maker at about $3 billion, people familiar with the matter told Reuters on Friday.
Aramco Digital is in talks to invest about $1 billion in Mavenir and a deal is likely to be signed before the end of the year, the sources said, cautioning that a transaction is not guaranteed.
Mavenir is working with investment bank Evercore on its talks with Aramco Digital, the sources said, requesting anonymity as the discussions are confidential.
The deal by Aramco Digital, the wholly-owned technology subsidiary of the oil giant, would be its first major transaction in the telecommunications industry as part of Saudi Arabia's Vision 2030 plan, which focuses on technological advancements and economic diversification.
Aramco and Evercore did not immediately respond to requests for comment. Mavenir declined to comment.
The telecom equipment industry, which has long been dominated by vendors such as Sweden's Ericsson (BS:ERICAs), Finland's Nokia (HE:NOKIA) and China's Huawei, is one of the few critical areas where U.S. companies do not have a significant presence.
Richardson, Texas-based Mavenir is a pioneer in a technology called Open Radio Access Network (Open RAN) that promises to radically cut costs for telecom operators building a mobile network. It uses cloud-based software and allows use of gear from many suppliers instead of relying on a handful of companies.
The company has so far raised at least $800 million in various funding rounds.
As the Trump administration took actions to thwart Huawei's U.S. business, it also pushed for more adoption of Open RAN technologies, which could put more American companies in the mix.
The push to promote Open RAN continued under the Biden administration, but it was not widely adopted as the emerging technology could not always match all the features that traditional telecom vendors could provide.
Last year, AT&T (NYSE:T) signed a $14 billion Open RAN deal with Ericsson for 70% of its wireless network traffic by late 2026, giving a renewed boost to the sector. Sources said the incoming Trump administration may also prioritize development of the technology.
US-SAUDI TIES
While a deal between Aramco and Mavenir is likely to go through a U.S. national security review, the Biden administration signed a deal with the Saudis in 2022 to cooperate on the technology to build 5G and 6G networks in Saudi Arabia.
As part of the deal with Mavenir, Aramco Digital is in talks to separately invest $200 million in a joint venture with the company for technology development in the region.
Aramco Digital in January announced its intent to build Saudi Arabia's first Open RAN development center in partnership with Intel (NASDAQ:INTC), which has been working with telecom firms such as Vodafone (NASDAQ:VOD) and Reliance Jio to develop the technology. Aramco Digital last week received a license to provide wireless services in Saudi Arabia.
A cash infusion from the Saudis would allow Mavenir to upgrade its 5G technology and better prepare for the 6G network rollout in the latter half of the decade, at a time when the entire telecom industry is going through a downturn.