JEDDAH/DUBAI, 12 August 2004 — The Etisalat-led consortium, which won the license to set up and operate the Kingdom’s second mobile network, plans to launch full-scale GSM services in major Saudi cities providing one million mobile lines within six months.
Muhammad Hassan Omran, acting executive president of the UAE-based Emirates Telecommunications Corporation, said a new joint stock company to be set up by the consortium to operate the service would provide 4,500 jobs over the next five years. He said 80 percent of these jobs would be set aside for Saudis.
Obaid Saeed ibn Meshar, senior executive vice president of Etisalat, indicated that the new Saudi mobile company could cut charges up to 15 percent.
“We have got powers to reduce telecom service charges up to 15 percent,” Al-Eqtisadiah newspaper quoted Meshar as saying.
However, Meshar emphasized that his company does not want to enter a price war with Saudi Telecom Company (STC), adding that such a war would not serve the interests of both the firms. He said any rate cut would depend on demand and supply.
In press comments published yesterday, Omran indicated that the partners in the consortium would generate half of the SR12.21 billion which they offered to win the license and pay the rest through bank loans. The amount will be paid to Saudi coffers within 21 days.
Addressing a press conference in Dubai on Tuesday, Meshar said the new company would allocate 15 percent of its profits from the Saudi project for the benefit of Saudi Arabia.
He said the company would invest SR20 billion on the project.
Meshar, who led the consortium’s bid to win the 25-year-license, said: “Even before the awarding of the license, we were doing our homework in the Kingdom.”
Saudi Arabia is a fast growing mobile market in the region. Studies have showed that the number of mobile lines in the Kingdom would reach 15 million within a few years. Revenues in the Kingdom’s GSM market are expected to soar to SR29.63 billion by 2007.
Meshar said the company would float 20 million shares, which account for 20 percent of its capital, at the rate of SR50 per share for public subscription within 30 days after the issuance of a royal decree licensing the company.
The new company will have a capital of SR5 billion. 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.
Meshar said the company would provide third generation mobile service within six months after receiving license, adding that the 3G technology would speed up Internet services in the Kingdom.
Mazen Hassouna, general manager of Rana Investment Company, said the company would make a revenue of 16 to 18 percent annually and the company would be able to retrieve its capital within five years.
Omran said Etisalat would invest about $1 billion on infrastructure to operate the Kingdom’s second mobile system. The entire Kingdom will be brought under Etisalat’s coverage in phases and through various technologies over the next five years, he said.
“Within the next three months, we should be making the transition to being a company,” said Omran.
The new company is looking at capital expenses of SR20 billion in the medium term to develop the infrastructure and raise its presence to optimum levels, he added.
