JEDDAH, 11 August 2004 — Saudis will own 65 percent of the new Etisalat telecommunications company, which will be established to operate the Kingdom’s second mobile phone network, according to Minister of Agriculture and Acting Minister of Telecommunications and Information Technology Dr. Fahd Balghunaim.
UAE telecom giant Etisalat, which leads the consortium that won the license to operate the second mobile, will have a 35 percent stake in the firm, the minister told Saudi Press Agency.
He said 20 percent of the shares would be floated for public subscription. The remaining 45 percent will be shared between the General Organization for Social Insurance (15 percent), Aljomaih Holding Company, Abdulaziz Al-Saghyir Commercial Investment Company, Rana Investment Company, Abdulla & Said Binzagr Company and Riyadh Cables Group of Companies (six percent each).
The Council of Ministers on Monday awarded the highly prized license to Etisalat Consortium as it offered the highest bid of SR12.21 billion. The Cabinet also granted the consortium a license for SR753.75 million to set up and operate the third generation mobile phone network with 3G technology and provide its services at national and international levels.
The Cabinet has approved the establishment of the new communications company, which will be a Saudi joint stock company.
Twenty percent of the company’s shares will be offered for public subscription within 30 days after the issuance of a royal decree licensing the company. At least 20 percent of the company’s shares owned by founders will be put on the stock market in the third year after its establishment.
Balghunaim said the new company would make mobile phone service available with the latest technology. The company, in addition to extending good telecommunications services, will make job opportunities available to thousands of Saudis directly or indirectly, he added.
The second mobile license comes as part of the government’s drive to privatize the telecom sector, improve telecom services and create a suitable atmosphere for competition.
Although Riyadh is opening up the mobile sector to competition, Saudi Telecom will retain a monopoly over landlines and Internet services until 2008.
Revenues in the Kingdom’s GSM market are expected to soar to SR29.63 billion by 2007 on the back of the partial privatization of the state-owned Saudi Telecom Company. STC, which has more than eight million mobile users, recently announced net profits of SR5.14 billion for the first half of this year.
Balghunaim said the Communications and Information Technology Commission had utilized the services of well-known international consultants in the licensing process, which carried out in complete transparency.
