Ten bid for KSA phone licence

Verizon Comms is among the consortia bidding for Saudi's second fixed line licence.

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By  Reuters Published  March 11, 2007

Consortia led by Verizon Communications and India's Mahanagar Telephone Nigam Ltd. are among 10 bidding for Saudi Arabia's second fixed line licence, the country's telecom regulator said on Saturday.

The licence is set to break state-controlled Saudi Telecom's (STC) monopoly over fixed-line phone services in the Gulf Arab region's largest telecom market, source of around half of its revenue in 2006.

Other consortia, bidding with local partners, include Qatar Telecommunications Co., Hong Kong's PCCW, China Telecom, Bahrain Telecommunications Co. and South Korea's KT Corp., the Communications and Information Technology Commission (CITC) said in a statement.

CITC is expected to name the winning consortium this year. The commission did not give details on the offers for the licence. "During the coming weeks, the CITC will study and evaluate the applications," CITC spokesman Sultan Al-Malik said.

STC has around 4 million fixed-line phone subscribers, which gives it a penetration rate of around 16% of the kingdom's 25-million population. Internet penetration barely exceeds 3%.

Analysts say the low penetration rate means strong growth potential for the new fixed-line operator. STC executives disagree, citing the high number of users of each fixed telephone line.

"The average Saudi households comprises five members," said STC marketing and sales executive Saad al-Qahtani.

One of the bidders for the fixed-line licence is Etihad Etisalat (Mobily), which operates Saudi Arabia's second mobile phone licence.

Mobily, an affiliate of Emirates Telecommunications Corp. (Etisalat), has attracted 6 million mobile customers since it started operating a second mobile phone licence in May, 2005. STC has some 14 million mobile phone customers.

Mobily's CEO Khaled al-Kaf said the Saudi market's potential for fixed-line telecommunications, especially broadband, was important given the strength of the Saudi economy and the high purchasing power.

"It will be good for us to win the licence to become an integrated telecom company," he told Reuters by telephone, without giving an estimate of the potential growth of the fixed-line penetration rate.

CITC will also grant a third mobile phone licence this year for which nine consortia are bidding.

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