JEDDAH, 30 January 2007 — A new mobile phone company, which will operate the Kingdom’s third GSM network, will float 40 percent of its capital while the new land-phone company will float 25 percent for public subscription, it was announced yesterday.
“Any company that is licensed to provide mobile phone services will float 40 percent of its capital for public subscription,” the Council of Ministers said in a statement following its weekly meeting chaired by Custodian of the Two Holy Mosques King Abdullah.
The Cabinet said the state-owned Pension Fund and the General Organization for Social Insurance (GOSI) would have a stake of five percent each in the mobile company. However, the new company will have the right to float additional shares two years after its establishment.
“Any company licensed to provide land phone service will float 25 percent of its capital for public subscription and allocate 10 percent of its shares to the Pension Fund and GOSI (five percent each). It will have the choice to float additional shares four years after its formation,” the Saudi Press Agency quoted a statement by the Cabinet as saying.
The Cabinet decided to reduce the commission received by the state from the revenues of the land phone service provider to 10 percent from 15 percent. As an exception, the rate will become five percent in the first year, effective the date of the license issuance, and eight percent in the second year.
Accordingly, the commission received by the government from Saudi Telecom will be cut to 10 percent from Jan. 1, 2008. “The commission to be charged by the state from companies providing commercial data services will be eight percent,” it added.
The Cabinet decision comes at a time when eight Asian, European and African companies are competing to win the Kingdom’s third mobile license, which is expected to add SR15 billion ($4 billion) to the state coffers. The companies include Orascom of Egypt, MTC of Kuwait, Oger Telecom and SingTel of Singapore, and MTN of South Africa.
The Communication and Information Technology Commission (CITC), the Kingdom’s telecom regulator, last month extended the deadline for submitting applications for the new mobile license to Feb. 24 and for the fixed-line license to March 10 in response to requests from several parties.
The Cabinet meeting commended King Abdullah for his call to leaders of the feuding Palestinian factions for an emergency meeting in Makkah to settle their dispute. “The meeting is a golden opportunity to end the infighting between the Palestinian factions,” it said.
The Cabinet commended joint international efforts in helping Lebanon to resolve the current crisis. “King Abdullah urged all Lebanese groups to work seriously to contain their differences and work jointly to protect the higher interests of their country,” the statement said. The meeting set up a central unit for the Saudi construction code at the Ministry of Municipal and Rural Affairs to become the authorized agency to follow up implementation of the code. The decision was taken after observing the destruction of some buildings within a few months after their construction.
The Cabinet instructed real estate companies in the Eastern Province that they should obtain certification from the Ministry of Petroleum and Minerals in order to make sure that the land they are developing does not belong to areas designated for oil, gas and mineral projects.
The ministry has to give the information within 90 days of the application. The Ministry of Municipal and Rural Affairs should not approve any construction plan within the licensed area except after coordinating with the Ministry of Petroleum and Minerals.
The Cabinet endorsed the cooperation agreement between Saudi Geological Survey and Arab Industrial Development and Mining Organization.
Talks will be held to reach an agreement with the Netherlands on scientific and educational cooperation.
