Mobile Telecommunications Company, the mobile phone operator in
Kuwait, has bid 22.9 billion riyals ($6.1 billion) for Saudi Arabia's
third mobile license.
On March 17th, the board of directors of CITC, chaired by Mohammed
Jamil Mullah, Minister of Communications and Information Technology,
selected the seven consortia from nine applicants. Egypt's Orascom
Telecom and Al-Shoula-MTNL consortium were out of the fray. The other
bidders were Samawat - Bharti Consortium (India, Singapore), Oger
Telecom (controlled by Lebanon's al-Hariri family), Kingdom Turkcel
(Kingdom Holding Co., owned by billionaire Saudi Prince Alwaleed bin
Talal bidding with Turkish mobile operator Turkcell), Digi cel Tawacel
Consortium, MTN Saudi Arabia Consortium & Abdullah Al Rajhi Reliance
Telecom (India).
The 10 consortia bidding for the fixed license 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).
The Remarkable Turnaround
In 1999, the Kingdom aimed for one mobile phone for each three
Saudis by 2006. At the end of 2006, Saudi Arabia had mobile
penetration at 76% (estimates).
CITC has engaged in extensive consultation with the public,
discussed issues, and posted, in full, the questions and answers in
its consultation exercise. It has also displayed marketing savvy
attracting over 19 bids for the fixed and mobile licenses.
By the end of the exercise, CITC will have implemented an
extremely successful licensing process, exemplary for the Arab world.
Arthur D. Little (ADL), the global strategy management consulting firm
with a significant presence in the Middle East, has been working with
CITC throughout the licensing process for the last 15 months.
Fuelling the Second Expansion
The Saudi telecom sector is poised to enter a second phase of
rapid expansion, as MTC activates the third mobile operation and the
Saudi Telecom Co competes with the new fixed players.
With a modern regulatory framework now firmly in place, Saudi
Arabia will increase investments in state-of-the-art infrastructure
that will meet the demands of its increasingly tech-savvy population.
Thomas Kuruvilla, Managing Director of Arthur D Little in the
Middle East, added: 'Where appropriate, the overall regulatory
framework was updated to ensure that consumers benefit from the latest
technological changes and provide a level playing field for the new
licensee. The new licenses will encourage additional investment in the
fixed local access infrastructure, catalyze the mobile market growth,
and accommodate future trends in convergence. Consequently, the Saudi
telecom market, in our view, will soon surpass that of many developed
countries.'
'The encouraging interest by international and experienced players
are the result of an extensive and elaborate series of public
consultations carried out by CITC, throughout the licensing process,
which not only generated substantial awareness of the new licenses but
allowed interested bidders to clarify their doubts and to increase
understanding of the potential of the telecommunications market in
Saudi Arabia.'
As evident through the competition for the licenses, the Kingdom
has the largest and fastest growing market in the Middle East - total
telecom revenues reached SR34.2 bn (US$ 9.1 bn) in 2005. Forecasts
indicate that the number of mobile phone and internet subscribers will
both virtually double over the next five years, while broadband
subscribers will increase more than six-fold from an estimated 90,000
in 2006 to 575,000 in 2011.
By the time these licenses are active, CITC, supported by Arthur
D. Little, will have implemented one of the most open telecom sectors
in the Middle East - a remarkable turnaround for a country which until
quite recently was considered as having inadequate and high priced
telecoms services.
