Bidders circle third Saudi GSM license

Kuwait's MTC is favourite to secure the lucrative third mobile license in an upcoming auction.

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By  Rob Corder Published  March 1, 2007

An upcoming auction for a third Saudi Arabian mobile operator license presents one of the last great opportunities for regional players that want to make a significant impact in the Gulf region, says Analysys, a global adviser on the telecommunications sector.

The Saudi market is the largest in the region in terms of inhabitants, and has a relatively wealthy population whose demand for mobile services has yet to be saturated.

The country is already home to two of the region's largest players: domestic incumbent Saudi Telecom Company (STC) and UAE's Etisalat, through its 35% stake in Mobily.

According to Research Analyst Daniel Jones, Middle Eastern operators are increasingly looking to opportunities in Africa to expand their businesses, but the Kingdom's third license presents a great opportunity for operators such as Kuwait's MTC, which is aggressively pursuing expansion in the region to compensate for decelerating domestic growth.

"The company recently launched a new business strategy, known as ‘ACE' (acceleration, consolidation and expansion), and arranged a $4 billion credit facility to assist with its expansion plans. As a result, MTC can be expected to be a very serious bidder in the auction," he predicts.

Jones also believes the South African firm MTN would also be in a position to launch a very credible bid; its interest in moving into Middle Eastern as well as African markets was underlined by its purchase of the Lebanese firm Investcom, which holds licences across the MEA region.

"Many smaller wealthy Gulf nations, such as Bahrain, Qatar, Kuwait and the UAE, are already reaching saturation. Countries where penetration is still low tend to have lower average incomes, such as in Yemen or Syria, so this could be the last chance for an operator to reach a Gulf market with a relatively wealthy population where saturation has not yet been achieved," he concludes.

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