JEDDAH, 22 April 2007 — Saudi Arabia will soon have four fixed-line phone service providers as the Kingdom’s telecom regulator yesterday gave initial approval to three consortia led by Bahrain Telecom Co. (Batelco), Hong Kong’s PCCW and US Verizon Communications to operate the country’s new fixed-line network.
“The Communications and Information Technology Commission (CITC) has approved the applications of the three consortia. Once they receive final approval from the Cabinet, there will be four companies to operate the Kingdom’s fixed-line network,” said Abdul Rahman Al-Fehaid, CITC’s deputy governor.
The new telecom companies will sell part of their shares in initial public offerings before the end of next year. Prince Abdul Aziz ibn Ahmed, chairman of Atheeb Telecom Consortium (Batelco-Bahrain), announced yesterday that his company would offer 25 percent to the public and 10 percent to the General Organization for Social Insurance (GOSI) and the Pension Fund.
The entry of the three companies ends the fixed-line monopoly of state-controlled Saudi Telecom Company.
Among the three qualified applicants only Al-Mutakamilah (PCCW-Hong Kong) and Atheeb consortia have applied for radio spectrum technology. “The public opening ceremony represents the first step of the Spectrum Award Process,” said CITC Gov. Mohammed Al-Suwaiyel about opening spectrum financial bids in Riyadh yesterday.
According to Fehaid, the new companies will start commercial operations a year after receiving their licenses. “The new fixed-line coverage should reach at least three regions in three years and the whole Kingdom in seven years,” he added. The combined capital of the three companies is expected to reach SR2 billion. The Verizon-led consortium said it would operate with a capital of $300 million and invest $3 billion linking 21 cities in seven years.
Prince Abdul Aziz said his consortium would pay SR500 million as spectrum fee and make an additional investment of up to SR2.5 billion to operate the network.
The Verizon-led consortium has paid a license fee of SR5 million to operate a cable network, Fehaid said. The two other consortia made 52 financial bids for the Kingdom’s 13 regions. For the more populous regions spectrum bids reached up to SR69 million.
“The financial spectrum bids do not necessarily determine the winners of the fixed-line licenses or the final value of the spectrum licenses,” Suwaiyel said. “Determining the successful applicants will require the evaluation of the documents accompanying the bids for conformance to the RFA (request for application for fixed licenses) requirements, as well as completion of the remaining steps of the spectrum award process which could take a few weeks,” the CITC chief said.
Thomas Kuruvilla, managing director of Arthur D. Little in the Middle East, which has been working closely with the CITC in the licensing process, previously hinted at the possibility of Saudi Arabia issuing multiple fixed-line licenses. “Technically, we can have all three as fixed service providers, Verizon providing wire-line, and the other two providing a combination of wire-line and wireless connectivity to consumers,” Kuruvilla told Arab News.
