STC slashes international call charges up to 63%

Saudi Telecom Company (STC), the state owned operator, slashed its rates for international phone calls by up to 63 percent to most countries as of September 2, 2002.

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By  Massoud Derhally Published  September 4, 2002

Saudi Telecom Company (STC), the state owned operator, slashed its rates for international phone calls by up to 63 percent to most countries as of September 2, 2002.

The cuts range from 8.3 percent to Germany and the Netherlands, to 63 percent to some other countries, STC President Khaled Al-Molhem said in a company statement.

According to an advertisement published by the company in the Saudi Arab News, the new cuts would cover both fixed lines and mobile phones.

Charges for calls to Gulf Arab states are reduced by 15 percent from SR2.6 to SR2.2 a minute during peak hours and as little as SR1.5 at off-peak.

The cost of calls to other Arab countries as well as to Britain and France, is cut by 15.5 percent from SR4.5 a minute to SR3.8 at peak hours and SR2.7 during off-peak hours.

Callers to India, Pakistan, Bangladesh and Sri Lanka will receive substantial discounts while rates to the Philippines have been reduced from SR5.5 a minute to SR4 at peak hours and to SR3.3 at off-peak.

Rates to the United States and Canada are down 25 percent from SR4 to SR3 a minute at peak hours and as low as SR2.4 at off-peak.

Calls to Japan, Italy, Hungary and a number of European countries are reduced from SR6 to SR3.8 a minute, a cut of 37 percent.Calls to Iran are down 8.3 percent from SR6 to SR5.5 a minute. Rates to most Latin American countries were reduced 21.5 percent drop.

The new cuts came after reports that STC would slash charges of international telephone calls made through cabins by up to 18 percent from Sept. 1.

Reports said the move was aimed at supporting Saudis who have invested in telephone call cabins.

Saudi Arabia had a leading fixed lines development program in the mid 1980s, and is back to being the fastest growing telecom market in the region. The telecommunications sector in Saudi Arabia has been growing by around 30% annually in the past few years, and the kingdom was estimated to have 3.3 million fixed lines and 3 million GSM mobile lines at the end of 2001, according to the International Telecommunications Union.

Since its establishment four years ago to operate on a commercial basis, Saudi Telecom has regularly cut the cost of international phone calls as well as the cost of land lines and mobile phones in the oil-rich kingdom.

The Saudi government has indicated that it wants to retire a portion of its US $170 billion debt by giving local lenders a share in unspecified companies. Among the companies exemplifying the potential for non-oil economic development is the Saudi Telecom Company (STC).

After mandating Gulf International Bank (GIB) in June 2002 to arrange the initial public offering (IPO) of STC before year-end, the Saudi government approved on July 27, 2002 regulations for the privatisation of its telecommunications sector, marking the demise of STC’s monopoly.

The move to approve telecom privatisation regulations comes ahead of the expected year-end initial public offering (IPO), of 30% of the government’s stake in STC, or 72 million shares worth an estimated 3.6 billion riyals (US $960 million).

The flotation of STC, which was established in 1998, would be one of the biggest in the kingdom, and is likened by some to selling the crown jewels.

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