RIYADH, 16 October 2004 — Etisalat of the UAE, which has won the second mobile phone service license jointly with a number of Saudi investors, has announced that it expects to get up to seven million subscribers in the first five years of its operations in the Kingdom.
The initial public offering (IPO) of shares in the Etisalat Consortium will start today as announced by the head of the Capital Market Authority. SAMBA Financial Group has been named the share flotation manager.
The Vice President of Etisalat and Executive Manager for Marketing, Mohammed Al-Fahiem, has said the company expects to start its services in the Kingdom from the beginning of next year. He added that the company would provide the most advanced services to its subscribers, which would include third generation mobile phone technologies enabling the subscriber to receive TV telecasts, in addition to transmission of pictures and other proactive services.
Etisalat has already started the work of laying the infrastructure to cover 33 cities and towns in Saudi Arabia and about 70 percent of the Kingdom’s regions. Fahiem said Etisalat is the first Middle East company to offer visual mobile phone services, according to information available here.
Competing with Saudi Telecom would not be difficult as Etisalat has the experience of the Gulf market which is in many ways similar to Saudi Arabia as far as habits and traditions of the population are concerned, he said. “We know the Saudi market,” he added. About the visual mobile phone service, he said third generation mobile services include many advantages other than visual reception, which is banned in the Kingdom.
The IPO will last 10 days and shares will be available for purchase through all banks in the Kingdom. Twenty million shares will be on offer, although there will be a limit of 10,000 shares per person, in order to allow room for small investors.
The Saudi Cabinet in August awarded Etisalat Consortium the second mobile phone license after Etisalat made the highest financial bid, offering SR12.21 billion.
Sources from the telecom sector believe that the award of the license for a second mobile phone network to Etisalat will open up the market for GSM-based value-added services, software and hardware companies, as well as IT professions, with the GSM market set for 30 percent rate next year and beyond.
“It will break the monopoly of the Saudi Telecom Company, trigger competition, and improve the quality of service,” Zahid Badshah, general manager and Mohammed Asif Malik, channel marketing manager of Zajil Telecom, a leading ISP, told Arab News.
An immediate impact of Etisalat’s entry into the Saudi market is the steady shrinking of the prepaid phone cards market for mobile phones.
Asif Malik said that of the eight million prepaid cards that are currently in circulation, the share of Sawa cards was 4.5 million, with Al-Jawwal accounting for the remaining 3.5 million. The situation will now be reversed with the arrival of Etisalat.
Malik said it would also provide impetus to value-added services in terms of mobile phone applications. Pointing out that there will be a growing market for GSM-based applications, Zahid said that they include Multimedia Messaging Services (MMS) that allows subscribers to send and receive “rich” content, including picture messages, sound files and short video clips and is intended to build on the popularity of the SMS (Short Message Service) texting supported by standard GSM networks.
