JEDDAH, 25 March 2007 — A consortium led by Kuwait’s Mobile Telecom Co. (MTC) made the highest bid for Saudi Arabia’s third mobile license with an offer of SR22.91 billion ($6.11 billion) to enter the largest mobile market in the Middle East. The Communications and Information Technology Commission (CITC), the telecom regulator, said the determination of the winner required Cabinet approval.
“The announcement of the bids does not necessarily mean that the successful applicant has been determined,” CITC Gov. Dr. Mohammed Al-Suwaiyel said. “Determining the successful applicant will require evaluation of the documents attached with the financial proposals… The results of the evaluation would then be considered by the CITC’s board of directors in preparation for submission to the Council of Ministers for the final approval of the results and determination of the third mobile license winner,” he added.
“We hope that we have won,” MTC Managing Director Saad Al-Barrak told reporters after the announcement of bids during a ceremony at CITC headquarters in Riyadh last night.
Other companies competing for the license were: Samawat-Bharti (which offered SR17.25 billion), Tawasul-Digicel (SR16.125 billion), Oger Telecom (SR15 billion), Kingdom Turkcell (SR11.25 billion), Abdullah Abdul Aziz Al-Rajhi-Reliance (SR11.25 billion) and MTN Saudi Arabia (SR8.4 billion).
Saudi Arabia is the Middle East’s fastest growing telecom market with total revenues from both mobile and land phones reaching SR34.2 billion ($9.1 billion) in 2005. Forecasts indicate that the number of mobile phone and Internet subscribers will virtually double in the next five years.
According to one study, total expenditure within the sector could reach SR225 billion ($60 billion) by the year 2020. At present there are 18 million mobile phones and four million fixed phones in the Kingdom. A consortium led by UAE telecom giant Etisalat paid SR12.21 billion for the second GSM license in 2004.
Arthur D. Little (ADL), the global strategy management consulting firm, has been working with the CITC throughout the licensing process for the last 15 months. “The mobile licensing process and its results have been encouraging. With 10 bids received for the fixed licensing, we now look forward to the short-listing step which promises to be very exciting. No other country has received so many bids for fixed licenses,” Thomas Kuruvilla, managing director of ADL in the Middle East, told Arab News.
Kuruvilla emphasized the need for Saudi Arabia to have more service providers and better choices as the country is poised for dramatic growth with the opening of megacities.
“Saudi Arabia now has an advanced regulatory framework which ensures the deployment of new and proven technologies for cost effective quality broadband services and will accommodate future trends toward converged offerings,” the ADL executive said.
“The new licenses will encourage additional investment in the fixed local access infrastructure, catalyze the mobile market growth and accommodate future trends in convergence,” Kuruvilla said. “The encouraging response to the licensing process is a testimony of market potential,” he added.
Analysts predict that the entry of a new service provider will increase competition in the Kingdom’s mobile phone market. MTC intends to market quality products in the Kingdom which has a population of 27 million, including expatriates.
MTC is expected to make four million subscribers in the first year of its operation. It will sell 40 percent of its shares in an initial public offering. Almarai is the leading Saudi company in the MTC-led consortium.
The announcement of the third mobile license comes before awarding the second land phone license. Ten consortia led by leading international companies including Verizon Communications of the US and Mahanagar Telephone Nigam Ltd. of India and China Telecom are competing for the land phone license. The 10 consortia are: Optical Communications Company (Verizon), Khaled Ahmed Al-Juffali Co. (WorldCall Telecom of Pakistan), Saudi Telecom Holding Co. (Qtel-Atco), Al-Mutakamilah (Hong Kong’s PCCW), Electronet (Autelia of Italy), Etihad Etisalat (Mobily), Atheeb Telecom (Batelco of Bahrain), Makkah Telecom (China Telecom), Al-Shola (MTNL India) and Bayanat (Korea Telecom).