Arab Advisors says bids for telco licenses to be low

A new report by the Arab Advisors Group shows that Arab governments that are looking to raise money through license auctions or through other means this year, may be faced with a bidding process that involves little competition and ultimately reduced license fees.

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By  Massoud Derhally Published  September 25, 2002

A new report “The State of Global Telecom Players: The Effect on the Arab World’s Privatisation and Liberalisation Plans”, released by the Arab Advisors Group’s (www.arabadvisors.com), shows that Arab governments which are looking to raise money through license auctions or through other means this year may be faced with a bidding process that involves little competition and ultimately reduced license fees.

“The tough state of the global telecom vendors may have unexpected benefits for the Arab World’s communications markets. The vendors are suffering from a decreased demand for infrastructure by their global customers,” said Jawad Abbassi, Arab Advisors Group’s president.

“This makes these vendors more likely to discount pricing for new networks in the Arab world in order to increase revenues. New operators therefore could have lower CAPEX costs, although it may be difficult to obtain vendor financing arrangements,” added Abbassi.

Eight global operators already have stakes in major Arab operators from Morocco to Bahrain, including: Cable & Wireless, Vodafone, France Telecom, Orange, Sonera, Vivendi, Telefonica and Portugal Telecom.

Saudi Telecommunications Company (STC) and Jordan Telecommunications are currently on the agendas of the Jordanian and Saudi Arabian government’s privatisation plans.

The Saudi government plans to float 30% of its share in STC this fall. The flotation is expected to raise close to SR 11 billion (US $3 billion). Proceeds of the STC flotation will help the Saudi government alleviate a chunk of its debt.

Jordan Telecom also plans to float some of its equity this fall. The company's revenues grew by 8.4% year on year to JD309 million (US $438 million). Privatisation amounts in Jordan exceeded US $936 million in 2001.

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