‘Foreigners Can Buy Mobily Shares’

JEDDAH — Etihad Etisalat (Mobily), Saudi Arabian mobile telephone operator, announced yesterday that the board of directors had taken two crucial decisions regarding the sale of shares by its founding shareholders and the increase of its capital.

Mobily Chief Executive Khaled Al-Kaf told Arab News that founding shareholders will offer to sell 20 percent of their shares to local and foreign investors during the third year of the company’s lifetime. “They are free to sell shares to whoever they want,” he said.

Al-Kaf said the company has already taken the approval from the Saudi Capital Market Authority (CMA), the stock market regulator, to complete the process.

The founding shareholders have informed the company that they intend to sell 100 million shares of the stock that they own. The sale of the 100 million shares will generate nearly SR7.3 billion based on the stock’s closing price yesterday. Mobily’s founders are the UAE’s Emirates Telecommunications Corp., which owns a 35-percent stake. Six Saudi institutional investors including the state-run Public Pension Agency and the General Organization for Social Insurance (GOSI) have 45 percent of the company’s shares.

CMA Chairman Abdul Rahman Al-Tuwaijri said in a television interview recently that Saudi Arabia would soon allow foreigners to invest in its stocks and initial public offerings (IPOs).

Al-Tuwaijri explained that the CMA would allow investment through domestic funds which will be established by licensed firms.

Al-Kaf said Mobily would raise its capital by 40 percent, or by SR2 billion to SR7 billion from the current capital of SR5 billion by issuing 100 million new shares.

“Rights to buying these shares will be given to current shareholders, whereby each of these shareholders has the right to buy shares in accordance to his current percentage of ownership on the day that the extraordinary general assembly approves the advice to raise capital, provided that 60 percent of the capital increase is allotted to founding shareholders and 40 percent to other non-founding shareholders,” Al-Kaf said, adding “these shares will be issued at a nominal value of SR10 with no issuance premium.”

Etihad Etisalat shares reacted positively to the announcement as its shares increased 1.04 percent to SR72.75 yesterday.

Mobily, which started operation in Saudi Arabia in 2005, announced recently that it made SR514 million profit in the fourth-quarter of 2007 compared with SR330 million a year earlier.

The competition among telecom companies is expected to hot up as Kuwait’s Mobile Telecommunications Co. (Zain) is set to enter the Kingdom as a third mobile network after Saudi Telecom Co. and Mobily.