Tuesday, May 14, 2013

(This story was originally published Monday.)

By Rory Jones

Virgin Mobile Middle East & Africa has made an application for a mobile licence in Saudi Arabia, tying up with Saudi Telecom Co. (7010.SA) to provide telecom services in the kingdom, according to Sir Richard Branson, the president of Virgin Group.

The mobile virtual network operator, which currently operates in South Africa, Oman and Jordan, plans to expand into Saudi Arabia, and is examining opportunities in the United Arab Emirates, Bahrain, Kuwait and Egypt, Mr. Branson told reporters at an event in Dubai on Monday.

"We have had 20-odd years of experience developing mobile phone companies and it's been a good experience and we are now trying to roll out Virgin Mobile throughout the Middle East," he said.

The Communications and Information Technology Commission, the Saudi telecom regulator, invited companies in January to submit applications to bid for three available MVNO licenses in the kingdom, a move geared at increasing competition and transparency in the Gulf region's largest telecom market.

MVNOs buy wholesale access to an incumbent operator's network and then market and sell telecom products without having to invest in physical infrastructure assets. As a criterion for applying for an MVNO licence in Saudi Arabia, the regulator has said each applicant must have already signed an agreement to tie up with one of the three incumbents operators--STC, Mobily and Zain KSA--before applying. The deadline for applications was on Saturday and a decision on the three licences is expected within weeks.

Five companies have submitted applications for licences, including Virgin, Dubai-based Axiom Mobile, London-based Lebara, and two Saudi companies called FastNet and Safari, according a statement on the regulator's website. Virgin Mobile MEA is the only company to partner with STC.

The Virgin brand is already present in the Middle East via Virgin Megastores, which has more than 14 stores in the region. The airline Virgin Atlantic also operates a route from London Heathrow to Dubai International.

"I think the perception of Virgin in the Middle East is a quality brand and that's how we will pitch the brand," said Mr. Branson. "Despite the owner getting a little older, it's still a young brand at heart and perceived as a young brand among young people so I think that gives us quite a big edge."

Virgin Mobile MEA recently received $50 million in funding from Kuwait's Gulf Investment Corp., or GIC, to help fund its planned expansion around the region. GIC and Virgin Group will be the two biggest single shareholders in Virgin Mobile MEA, with equal minority share, alongside ePlanet Capital, Dolphin International, NTEC and Millennium Private Equity. Virgin Mobile has operations on five continents and approximately 20 million mobile customers, according to the company.

Write to Rory Jones at rory.jones@wsj.com

(END) Dow Jones Newswires

14-05-13 0342GMT