By Alexander Cornwell

DUBAI, May 2 (Reuters) - Kuwait's Zain Group ZAIN.KW and Saudi Telecom Co (STC) 7010.SE have both applied to become the third mobile operator in Oman as the country's regulator looks to award its first licence since 2004.

Zain announced on the Kuwait bourse on Tuesday that it had submitted an offer to bid for the licence. Rival STC had confirmed its application a day earlier.

The shortlist of qualified applications will be announced on Aug. 14, with the winning bid to be announced on Sept. 4, according to statements from the companies.

Oman's Telecommunications Regulatory Authority (TRA) said last year that it was inviting bids for what will be the first mobile network operator licence Oman has awarded since Ooredoo Oman OTL.OM , then branded Nawras in Oman, started operations in the country in 2004.

Oman Telecommunications OTL.OM (Omantel) and Ooredoo Oman each have a market share of about 41 percent, with virtual mobile network operators holding about 17 percent, the regulator says.

Like neighbouring Gulf Arab states, Oman has a significant young, tech-savvy population that is viewed as a significant driver of growth in the region's telecoms and IT services sector.

The sector is expected to be worth more than $700 million in Oman next year, up from $590 million in 2015, research company IDC says.

"Despite the economic woes and oil price fluctuation, the Omani telecoms market has witnessed relatively healthy growth," said Dubai-based IDC lead analyst Paul Black.

Oman, with a population of about 4.55 million, had a mobile penetration rate of 151 percent with 6.87 million users in the fourth quarter of 2016, the regulator says. The vast majority of users were pre-pay customers.

Zain operates in eight countries in the Middle East and Africa, while Saudi Arabia-based STC has subsidiaries and joint ventures in the Middle East and Asia.

Omantel, which has operated in the country since 1970, and Ooredoo Oman both reported declining first-quarter profit, citing higher royalty and tax rates.

(Additional reporting by Hadeel Al Sayegh; Editing by David Goodman) ((;))