JEDDAH -- A consortium led by the UAE's telecom giant Etisalat, which won the Kingdom's second mobile license for SR12.21 billion, has deposited 80 percent of the amount in an independent account as part of completing the licensing process, banking sources said.
Al-Eqtisadiah business daily, quoting the sources, said the consortium would pay the remaining 20 percent by selling its 20 million shares in October. The paper also revealed that Samba Financial Group would manage the floatation.
The finance for the bidding was arranged by Samba with the participation of other Saudi banks and a number of Gulf banks such as Dubai Bank, Abu Dhabi Bank and Kuwait Finance House as well as the Citibank.
Saudi Arabia awarded the highly prized license to Etisalat Consortium in early August. The Saudi Cabinet also granted the consortium a license for a fee of SR753.75 million to set up and operate the third generation mobile phone network with 3G technology and provide its services at national and international levels.
A new company named Etisalat Consortium will be established to operate the second mobile phone network. Saudis will have a 65 percent stake in the company, with a capital of SR5 billion, while Etisalat will hold 35 percent. At least 20 percent of the company's shares owned by the founders will be put on the stock market in the third year after its establishment.
The General Organization for Social Insurance has a 15 percent stake in the new firm while Aljomaih Holding Company, Abdulaziz Al-Saghyir Commercial Investment Company, Rana Investment Company, Abdulla & Said Binzagr Company and Riyadh Cables Group of Companies hold six percent each.
The Saudi award effectively clears the way for Etisalat's rapid GSM expansion, its provision of enhanced customer services and the transfer of its enabling technologies to the largest market in the region.
"The award also marks a huge leap forward for Etisalat's strategy of rolling out its cutting edge technology and premium services across the region," said Dr. Mohammed Khalfan ibn Kharbash, its chairman.
Mohammad Omran, Etisalat's acting president and chief executive officer, said his company had devised plans to meet the Kingdom's growing telecom requirements by deploying the most advanced technologies and providing the latest services in line with the guidelines of the Saudi Communications and Information Technology Commission.
"Our initial focus will be on expanding the reach of GSM services to ensure that we are moving forward as quickly and efficiently as possible," Omran said. "With a current GSM penetration level of less than 35 percent in the Kingdom, there is a large segment of the market out there that does not have the service. Our focus is on that 65 percent," said Obaid Saeed ibn Meshar, Etisalat's senior executive vice president.
Etisalat plans to launch full-scale GSM services in major Saudi cities providing one million mobile lines within six months.
"We have the authority to reduce telecom service charges by up to 15 percent," the Arabic daily quoted Meshar as saying.
However, Meshar emphasized that his company does not want to enter a price war with Saudi Telecom Company, adding that such a war would not serve the interests of either firm. He said any rate cut would depend on demand and supply.
P.K. Abdul Ghafo
© Arab News 2004
