DUBAI, 21 January 2007 — Telecom industry in the Middle East is expecting brighter prospects in 2007 as mobile growth in most of the regional countries is likely to continue this year, according to a leading global rating agency.

Regional telecommunication operators will continue to focus on international expansion, particularly in Saudi Arabia and Qatar where opportunities abound.

Fitch Ratings report noted that investments in infrastructure will stabilize and capital expenditure as a percentage of revenues will fall for most regional telecom operators in 2007.

Saudi Arabia is one of the major Middle Eastern markets with strong growth potential. Fitch expects mobile penetration to grow gradually in the short-term as the third license to be auctioned in second quarter of 2007 opens the market to a new GSM operator, which will intensify price competition.

Saudi Arabia could follow other markets such as Bahrain and the UAE, in that full mobile penetration could be reached in the next five years.

As growth seems to be exhausted in the biggest markets of the Middle East, most of the growth in 2006 in the Middle East and North Africa (MENA) region originated from North Africa, particularly out of Algeria, Egypt and Morocco.

The Egyptian Telecom market stands out as one of the fastest growing in the MENA region. Fitch said telecom revenues had represented only 1.5-6 percent of Egypt’s GDP in 1998 while telecom revenues are estimated to surpass 4.5 percent of GDP in 2006 — even before the launch of the third mobile operator, Nile Telecom, by Etisalat. Revenue from mobile services contributed nearly 60 percent of total telecom revenues in the 2006 financial year. Although there are ongoing political and economic risks in some of the Middle Eastern markets such as Iraq, Lebanon and Iran, Fitch notes that there is impressive growth potential. Mobile penetration rate in Iraq reached 26 percent during 2006 financial year. MTC Telecom, for example, clocked up a 164 percent year-on-year growth in mobile subscribers in Iraq.

Fitch said the telecom industry liberalization and deregulation process in the region is moving faster than expected. The possible establishment of a third cellular operator in the Kuwaiti market comes as a welcome surprise. The offering of a third GSM second/second fixed license in Saudi Arabia and the opening of the Qatar telecom market to competition, will lead the next wave of telecom liberalization and deregulation in the Gulf.