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Etisalat bids the most for Saudi GSM license

Its offer of US $3.3 billion should land it the much sought after license, but the decision still has to be ratified by the Saudi cabinet.

A consortium including Etisalat has made the highest cash bid for Saudi Arabia’s second GSM license.

The SR12.21 billion (US $3.3 billion) offered is on a par with the sums paid for Europe’s 3G licenses and reflects how keen investors are to enter the Saudi mobile telecomms market.

According to the rules of the tender, Etisalat should now be granted the license, but the decision still has to be ratified by the Saudi cabinet.

South Africa’s MTN was the second highest bidder, offering SR11.05 billion. Telefonica Moviles, backed by Prince Alwaleed bin Talal, made the lowest bid at SR6.7 billion.

The envelopes containing the bids were opened in private, despite earlier pledges that this would be done in front of the media to ensure transparency. Six companies made it to the final shortlist of bidders, having made it through the Saudi telecomms regulator’s technical evaluation.

The Vodafone consortium, which was the hot favourite to land the license, was disqualified at the technical evaluation stage.

Saudi Arabia is seen as one of the last great untapped mobile communications markets in the world. Whilst 32% of a population of 22 million currently has a mobile, Arab Advisors predicts that the figure could reach 76% by 2007.

At the same time, average monthly revenue per user (RPU) of $63 is one of the highest in the world. Saudi Telecom Company, which operates Saudi Arabia’s existing sole mobile network, generated around $4.5 billion in revenues from its GSM service in 2003.

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