STC wins out in Kuwaiti telco race

Saudi Telecom Company (STC) has won the third mobile concession in Kuwait with a bid worth an estimated $907.6 million according to local press reports.

The company submitted the highest bid to the Kuwait Investment Authority (KIA) for a 26% stake in the nascent operator heading off competition from consortia backed by regional telcos including Etisalat, Batelco and Turkcell.

STC CEO Saad Al-Dowaish has been quoted as saying that his company harbours ambitions of holding a 30% market share within ten years in Kuwait adding that it was an "attractive market".

The government will auction a further 50% of the new company in an initial public offering (IPO) open to Kuwaiti citizens only and retain the remaining 24% of the company.

Kuwait's third mobile operator is expected to launch operations at some point in 2008 although no brand has formally been launched yet. STC will go up against incumbent telcos Zain and Qtel subsidiary Wataniya in a three million-strong market where mobile penetration stood at 104% as of 2Q07, according to a recent report by Dubai based research firm Delta Partners.

However, Delta partner analysts also note that Kuwait is the third most valuable Middle East mobile market, in terms of the average revenue per user, with a reported ARPU of $60.

The Kuwait acquisition is a milestone for STC, which generates 63% of all telecoms revenues in the region, signalling the company's first move outside of its domestic market in the MEA region.

In June, the company agreed to purchase 25% of Malaysia's largest mobile operator Maxis as well as take a 51% stake in Maxis' Indonesian unit for a combined total of $3.04 billion.

STC's Al-Dowaish has also openly spoken of his company's eagerness to invest further in the MENA region, as well as sub-Saharan Africa, as part of his ‘10x10' inorganic growth strategy that he hopes will generate 10% of the company's overall revenues by 2010 as competition in Saudi Arabia heats up.