RIYADH, 18 November 2003 — The Communications and Information Technology Commission (CITC), the Kingdom’s regulatory body for the telecommunications and IT industry, announced yesterday its intention to award new mobile communications licenses next year.
Habeeb Al-Shankiti, acting governor of CITC, said it would be the fourth telecommunications services market to be opened for competition in the Kingdom. Internet service providers or ISPs have been licensed to offer Internet services in the Kingdom since 1999. More recently, CITC issued licenses to four new VSAT (very small aperture terminal) service providers. Last week, CITC also launched a licensing process for the data telecommunications market.
Al-Shankiti said: “This is a milestone in the liberalization of the Kingdom’s telecommunications industry. Since the introduction of mobile services in the Kingdom in 1995, the market has grown rapidly. The Saudi mobile market, however, has yet to reach its full potential and introducing competition will help broaden the range of services offered and make the services more affordable.”
CITC said it had retained a consortium of advisers to oversee the licensing process and award of cellular mobile and data telecommunications services licenses in 2004. Knowledgeable sources point out that even though the authorities have decided to award cellular mobile communications licenses next year, the move may not entirely break the Saudi Telecom Company’s monopoly.
STC, the only provider of the Kingdom’s telecommunications services, except VSAT and Internet services, reported mobile revenues of SR12.9 billion last year. It had over five million mobile subscribers at the end of last year, representing a penetration rate of 22 percent.
Sources point out that the new mobile company will still have to rely on STC for the use of its infrastructural facilities. “There will be competition; however, STC has been preparing itself over the last few years. The licensee will still have to use STC infrastructure so although it will be competing with STC, it will, at the same time, be generating income for STC,” the source explained.
He said that any newcomer to the Saudi telecom sector will initially have to use the STC network. “Should they choose to roll out their own networks, it will take longer to set up.”
The dominance of STC in the telecommunications market is expected to continue till 2008, when the government will issue another license for landline services to a telecom company.
According to sources at Gulf International Bank, which acted as the exclusive financial adviser during the run-up to STC’s initial public offering (IPO), CITC will decide later whether the licensing of another company is warranted.
