Top Bidder for New GSM License to Be Announced Today

JEDDAH, 13 July 2004 — The highest bidder from among six consortia, which is almost certain to win the license for a second mobile phone operator in the Kingdom, will be announced today, according to a telecommunications official.

“The financial offers will be opened Tuesday at a ceremony attended by representatives of the six consortia and officials from the Communications and Information Technology Commission (CITC),” the CITC official told the French news agency Agence France Presse.

“The consortium that makes the highest offer will be the CITC’s chosen candidate for the license,” he said.

Six consortia, each including an international operator and at least five Saudi companies, were short-listed after consortia including Britain’s Vodafone and France’s Bouygues were unexpectedly eliminated from the race at the end of the technical evaluation phase on Saturday.

The candidate selected by the CITC will have to be approved by the government, which is expected to endorse the commission’s choice.

The six consortia bidding to become the second GSM operator in the lucrative Saudi market, which has some eight million mobile users with a growth rate of about 30 percent, include firms from Egypt (Orascom), Italy, Kuwait (MTC), Spain (Telefonica Moviles), South Africa (MTN) and the United Arab Emirates (Etisalat).

They are: Etisalat Consortium (Etisalat), Kingdom Telefonica Consortium (Telefonica), MTC and Partners Consortium (MTC), MTN Saudi Arabia Consortium (MTN), Orascom Telecom Saudi Arabia Consortium (Orascom) and Samawat Consortium (Telecom Italia Mobile).

The CITC official said that in the unlikely event that two bidders made identical financial offers, an auction will take place to determine the winner.

The highest bidder will have to prove his solvency and deal with a bank approved by the CITC. Otherwise, the commission will go for the second highest offer.

The CITC has said that the selected candidate for a GSM service might also qualify for a 3G license if its proposal is deemed adequate.

Prince Alwaleed ibn Talal, who is partnering Telefonica of Spain, was quoted here as saying the investment in the project could reach $1 billion.

An Arab industry report has predicted that revenues in Saudi Arabia’s GSM market will soar to $7.9 billion by 2007 on the back of the partial privatization of the state-owned Saudi Telecom Company and increased competition.

Although the Kingdom is opening up the mobile sector to competition, Saudi Telecom will retain a monopoly over land lines and Internet services until 2008.