Seven in frame for Kingdom’s second GSM licence

23 Mar 2004

Seven consortia have obtained pre-qualification criteria enabling them to enter the forthcoming auction of Saudi Arabia’s second GSM licence, according to the country’s Communications and Information Technology Commission (CITC). Under guidelines set by the Supreme Economic Council, bidding consortia must contain at least five Saudi companies and one international mobile operator. The latter is permitted to take between 15% and 49% of the new start-up, but must meet a number of strict pre-qualification criteria: it must have at least two years experience of operating a national network serving at least 1.5 million customers, must have a market capitalisation of at least USD1 billion, and must be listed on its national stock exchange. The requirement for a minimum involvement of five local companies in each consortium is an attempt by the government to meet the high demand from Saudi business groups to become involved in the country’s potentially lucrative communications sector. Among the companies to have pre-qualified are Vodafone, Deutsche Telekom, Etisalat of the United Arab Emirates, Telefónica of Spain, Kuwait’s NMTC and the domestic concern, Kingdom Holding. The CITC is set to announce the winner of the concession in July.

The Saudi mobile communications market is currently a monopoly of the state-owned service provider Saudi Telecoms Company (STC), which was created in May 1998 to take over the operational functions of the Ministry of Post, Telegraph and Telephone (MoPTT). Although the MoPTT launched a GSM-900 network in January 1996, it was not until the formation of STC that the mobile market really took off. Over half a million new subscribers signed up in 2000, taking the total to 1.38 million, and the following year new additions numbered over a million. In 2002 STC launched pre-paid services, and during that year mobile customers eclipsed fixed line subscriptions for the first time, with the cellular subscriber base almost doubling to around five million. At the end of that year mobile penetration stood at 21.3%, compared with fixed line teledensity of just 14.5%. By the end of September 2003 STC’s subscriber base had grown to 6.8 million, of which 50.2% were pre-paid customers.

PriMetrica's Global Comms Database