US telco set to take stake in Saudi Telecoms Company

Investment from SBC Communications would give STC access to management and technical skills from one of the USA's most successful operators.

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By  Rob Corder Published  September 3, 2000

Saudi Arabia looks set to import the technical and management expertise of SBC Communications to help run the state telecommunications company, STC.

Newspapers in the Kingdom are quoting “Western sources” saying that SBC would take a stake of between 20% and 40% in Saudi Telecommunications Company, although neither the Saudi government nor STC would confirm or deny the report.

Rumours of a partial sell-off for STC have intensified over the past 12 months, and several international telecommunications specialists have been linked with a possible deal.

SBC Communications is part of BellSouth, one of the “Baby Bells” created when the AT&T monopoly in the US was broken up.

The company has since grown to dominate the Southern United States, as well as working internationally with joint venture deals similar to the proposed STC project. In 1997, for example, SBC became the first Bell operating company to make a major investment on the African continent when it took an 18% ownership stake in Telkom South Africa. Currently, SBC serves 5.2 million access lines in South Africa, and also is developing a second national wireless network, serving more than 1.6 million wireless customers through Telkom's wireless subsidiary, Vodacom.

Recipe for Success

Inviting foreign investment in Middle East telecom operators is not new to the region. Batelco, for example, brought in money and expertise from Cable & Wireless, and within 12 months had become the most technically sophisticated operator in the Middle East. The investment also helped Batelco extend their reach beyond the borders of Bahrain into Saudi Arabia, Kuwait and Jordan.

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