JEDDAH, 18 March 2007 — Kingdom Turkcell, MTC & Partners, Samawat-Bharti, Oger Telecom, Tawasul-Digicel, MTN Saudi Arabia and Abdullah Abdul Aziz Al-Rajhi-Reliance have been qualified to bid for Saudi Arabia’s third mobile phone license, it was announced yesterday.
The board of directors of the Communications and Information Technology Commission (CITC), chaired by Mohammed Jamil Mulla, minister of communications and information technology, selected the seven consortia from nine applicants.
“The evaluation conducted by the CITC has resulted in qualifying seven of the nine applications,” said Dr. Mohammed Al-Suwaiyel, governor of the commission, in a statement. In accordance with the CITC statement, Egypt’s Orascom Telecom and Al-Shoula-MTNL consortium are out of the fray.
The CITC will open the single sealed financial proposal of each of the seven eligible applicants during a ceremony in Riyadh on March 24 in the presence of the companies’ representatives.
“These financial proposals will then be evaluated and the final results will be submitted to the board of directors and subsequently to the Council of Ministers for awarding the license to the successful bidder,” Sultan Al-Malik, the CITC spokesman said.
Malik did not say when the winner of the third mobile license would be announced but an informed source told Arab News that it would take place within a month.
Kingdom Holding Company, owned by Prince Alwaleed bin Talal, is bidding for the prestigious license with Turkish mobile operator Turkcell. Kuwait’s Mobile Telecom Co. (MTC), Dubai-based Oger Telecom and South Africa’s MTN are other major bidders. The CITC did not give values for the bids for the third GSM license but market analysts predicted that the government would receive nearly SR20 billion from the license sale.
A consortium led by UAE telecom giant Etisalat paid SR12.21 billion for the second GSM license in 2004. Etihad Etisalat, in which the UAE company has a 35 percent stake, captured 30 percent of the market within 18 months of launching operations in May 2005.
Saudi Arabia, considered the largest telecom market in the region, also plans to end the fixed line monopoly of Saudi Telecom Co. this year to liberalize the market. There are four million fixed-line users in the Kingdom, which has a population of 27 million including expatriates.
Ten consortia led by leading international companies including Verizon Communications of the US and Mahanagar Telephone Nigam Ltd. of India and China Telecom are competing for the Kingdom’s second land phone license.
The 10 consortia are: Optical Communications Company (Verizon), Khaled Ahmed Al-Juffali Co. (WorldCall Telecom of Pakistan), Saudi Telecom Holding Co. (Qtel-Atco), Al-Mutakamilah (Hong Kong’s PCCW), Electronet (Autelia of Italy), Etihad Etisalat (Mobily), Atheeb Telecom (Batelco of Bahrain), Makkah Telecom (China Telecom), Al-Shola (MTNL India) and Bayanat (Korea Telecom).
Thomas Kuruvilla, managing director of Arthur D. Little Middle East Ltd., that has been working with the CITC in the licensing process for the past 15 months, said the response of international companies to bid for the two licenses were extremely encouraging.
“I have never seen such a huge response from international companies to bid for a telecom license. A total of 19 companies have applied for the Kingdom’s mobile and land phone licenses. It shows that the market is very attractive,” Kuruvilla told Arab News. He said the CITC’s extensive interaction with the public had played a big role in attracting a large number bidders.
Saudi Arabia’s mobile penetration rate is about 76 percent and could rise to 95 percent within two years as the Kingdom’s population grows, according to Marc Hammoud, senior telecom analyst at Dubai-based investment bank Shuaa Capital.
Al-Suwayel expressed his appreciation for the efforts and contributions of all parties who participated in the various phases of the licensing process. “We wish success to all in this important phase of liberalization of the Kingdom’s telecom market,” he said.
Saudi Telecom was established in 1998. It sold 20 percent of its shares to Saudis in a major initial public offering in 2002 and five percent each to the General Organization for Social Insurance (GOSI) and Pension Fund. It has won 62nd position among the world’s 500 largest telecom companies in 2005, in terms of market value.
