Tuesday, Dec 19, 2006
By Majdoline Hatoum
Of DOW JONES NEWSWIRES
DUBAI (Zawya Dow Jones)--A consortium led by Kuwait Finance House is preparing to bid for Kuwait's third telecom license and plans to run the company as the world's first Islamic Shariah compliant telecom operator.
Kuwait's cabinet Sunday agreed to establish a third mobile operator, and officials said the decision will be discussed in Parliament early January.
"We have been preparing ourselves to bid for the country's third mobile license for about four months now, and we formed a consortium with two of our shareholders to fight for the license as soon as the government opens the door for bids," Ebrahim Al Khuzam, senior advisor to the Chairman at KFH, told Zawya Dow Jones in a phone interview Tuesday.
Al Khuzam said that the consortium comprises KFH, the Public Authority for Minors Affairs and the Kuwait Awqaf Public Foundation, both of which are government entities that own shares in KFH.
"We believe that there is a need in our community for a telecoms operator that can protect the morals and principles of our religion, and we believe we can offer a Shariah compliant telecom service if we win the bid," he said.
Al Khuzam said the firm would only provide services approved by Islam's rules.
"For example, voting for Star Academy shows would not be allowed," he said.
Star Academy, the Arabic version of the American Idol singing talent contest and the U.K.'s Pop Idol, raised criticism from the conservative Islamic community in Kuwait last year.
Members of Parliament at the time demanded that the show be taken off air as it breached the instructions of Islam by allowing male and female contestants to live in the same house.
The country's two mobile operators were also criticized for allowing people to vote on their networks.
"Also, the contents of the MMS services and Bluetooth services would be monitored, and the company's revenues would be used in a Shariah compliant way," Al Khuzam added.
But KFH's plans for an Islamic Shariah compliant telecom operator will have to wait until after the bids are placed for the country's third telecoms license, set for early 2007.
Kuwait's incumbent operators are two of the region's largest telecom companies - Mobile Telecommunications Company, and Wataniya Telecom.
The country already enjoys over a mobile penetration level of over 90%, making it a tough sector for any new entrant.
But being a Shariah compliant company might give the new entrant a push forward, as it would attract support from Muslims in the highly conservative country.
"It is very unclear how being Shariah compliant would affect the performance of a telecoms operator, but what is for sure is that it would attract support from many Muslims, who would form warm sentiments towards the new company," Amit Tripathy, senior analyst at Kuwait's Global Investment House said.
"It would definitely involve investment in Shariah-compliant funds though," he said. "It is a highly innovative idea, but we have to wait and see before we analyze how its business performance would be."
The notion of a Shariah-complaint telecom operator also seems to be strongly supported by some members of Parliament, as Faisal Ali Mussalem, an Islamist Kuwaiti parliamentarian said.
Al Mussalem told Zawya Dow Jones in a phone interview that many members of parliament and non-governmental groups are looking forward to a telecoms operator that is run according to Islamic Shariah rules.
"We are an Islamic country, and we hope that the country's new operator will be run according to Islamic Shariah," he said. "If it does happen, it would be the first of its kind, and we would be very proud to have been able to introduce the rules of Islam to a tool we use on daily basis."
The Kuwaiti Parliament is controlled by the opposition, which is mainly influenced by Islamist MPs.
-By Majdoline Hatoum, Dow Jones Newswires; +9714-223-1134; majdoline.hatoum@dowjones.com
Copyright (c) 2006 Dow Jones & Company, Inc.
(END) Dow Jones Newswires
19-12-06 1603GMT
