Etihad Etisalat planning US$530 million rights issue

Etihad Etisalat, which will operate under the Mobily brand name, is set to launch commercially in the coming months and will face stiff competition from the incumbent operator Saudi Telecommunications Company.

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By  Tawanda Chihota Published  May 20, 2005

Etihad Etisalat, the Saudi Arabian GSM licensee backed by UAE operator Etisalat, is preparing a rights issue estimated to be worth up to SR2 billion (US$533 million), sources in the kingdom report. HSBC bank is said to have been awarded the deal to oversee the process, though bank sources have so far refused to confirm this. The transaction would represent Etihad Etisalat's second tranche of public financing, following an initial public offering last year of a 20% stake in the company, which raised US$267 million and was 51-times oversubscribed. Founding Saudi investors hold 45% of Etihad Etisalat's equity, while Etisalat owns the remaining 35%. An original June deadline for further financing, set out in Etihad Etisalat’s prospectus, is not likely to be met because of the amount of time it took to settle on a lead manager for the second offering. Thus the exact timing of the rights issue is yet to be confirmed though Saudi nationals who participated in the IPO may able to participate in the rights issue through HSBC's automated teller machines, it has been suggested. Etihad Etisalat, which will operate under the Mobily brand name, is set to launch commercially in the coming months and will face stiff competition from the incumbent operator Saudi Telecommunications Company, which has been preparing for competition for more than a year. In February, for example, STC halved its mobile connection fee from SR100 to SR50.

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