By A Sharif and A Fardan/Bloomberg
Mobile Telecommunications Co., the biggest mobile phone operator in Kuwait, said it agreed to pay 22.9 billion riyals ($6.1 billion) for Saudi Arabia’s third mobile license to enter the largest Arab economy.
Kuwait City-based MTC termed the Saudi market “attractive,” in the e-mailed statement it released today announcing the agreement. MTC beat six competing consortiums.
Saudi Arabia, the world’s largest oil exporter, is the biggest economy in the Gulf and has lower mobile phone penetration than its neighbours. MTC has spent more than $5 billion in the last two years to add customers in Africa as its domestic market is saturated.
The price the company is paying compares with the $3.25 billion that Etihad Etisalat Co., known as Mobily, paid for the kingdom’s second mobile license in 2004 and the $5.3 billion that some local media reports had said the new license might fetch.
Saudi Arabia has a “low” mobile phone penetration rate of about 70% compared with an average of 118% in the six Gulf Cooperation Council states, excluding the kingdom and Oman, according to MTC. The average revenue per user in Saudi Arabia is “high,” MTC said, at about $35 a month.
Fixed line penetration in the nation is around 16%. About 58% of Saudi Arabia’s population is less than 25 years old, MTC said.
Saudi Telecom, Mobily
State-owned Saudi Telecom Co. and Mobily are the two existing mobile phone operators in Saudi Arabia and have about 15 million subscribers. Emirates Telecommunications Corp. of the UAE, known as Etisalat, owns 35% in Mobily.
Phone companies in the Gulf, such as MTC and Etisalat are expanding as domestic markets mature. Record earnings from oil- spurred economies allow them to pay more for licenses than foreign rivals.
Qatar Telecom QSC, the Gulf emirate’s monopoly phone company, on 2 March agreed to buy a controlling stake in Kuwait’s National Mobile Telecommunications Co., the nation’s second- largest mobile phone company, for $3.7 billion as its domestic market is saturated.
Bidders for the license had included Oger Telecom of Saudi Arabia, and Kingdom Turkcell, a joint venture between Turkey’s biggest mobile phone company and Saudi billionaire Prince Alwaleed bin Talal. South Africa’s MTN Group Ltd, Reliance-Al- Rajhi, Tawasul-Digicel and Samawat-Bharti Group also submitted bids.
Orascom Telecom Holding SAE of Egypt and Mahanagar Telephone Nigam Ltd of India were eliminated after the first bidding round, the regulator said previously.
The license award still will need the final approval of the Saudi government.