RIYADH, 24 September — Earnings of Saudi Telecom Company, 30 percent of whose shares will be sold by the end of the year, are set to boom on increasing demand for both GSM and fixed lines in the Kingdom, according to an industry report.
"STC still holds great potential, especially that both fixed-line and GSM markets in the Kingdom have not yet reached their envisaged potential and the company has ample time to satisfy the pent-up demand in these segments," the Arab Advisors Group said in a report released yesterday.
"The introduction of a pre-paid service in the GSM market in April has already resulted in a boom in GSM market growth and will enhance STC’s revenues from the rapidly growing GSM service. Add to this the plans to reduce the government’s revenue-sharing agreement with STC, and the more than six years of monopoly time left, and STC has a lot of time to put its house in place and justify its high valuation," the Jordan-based group said.
The Council of Ministers announced earlier this month that STC will put on sale 30 percent of its capital — a chunk of shares worth some $3.26 billion — before the end of 2002, in the biggest state selloff for 20 years. The company’s capital would immediately be increased from $3.2 billion to $4 billion by dipping into profits.
The announcement is intended to herald a government privatization drive to liberalize an economy heavily dependent on oil prices. The telecom sector will also be opened to competition beginning with mobiles in the last quarter of 2004 and fixed lines in the final quarter of 2008.
