Eight local and international consortia submitted bids on 26 June to the Communications & Information Technology Commission (CITC) for the second GSM licence in the kingdom. Eleven consortia were prequalified in April to participate in the tender (MEED 23:4:04).

The bid evaluation process will be carried out in two phases. In the first phase, CITC will assess all technical, commercial and operational proposals, with consortia that achieve a rating of at least 85 per cent in the evaluation process qualifying for the second phase evaluation. This will see financial offers being opened in a public ceremony and the consortium with the highest priced proposal being recommended for the GSM licence. The final element of the evaluation procedure covers the full evaluation of the recommended consortium’s 3G proposal. CITC will then make a final recommendation to the Council of Ministers to award a GSM licence only or a GSM/3G licence. CITC plans to award the 15-year GSM licence by the fourth quarter, with operations to be launched in the first quarter of 2005.

The new GSM operator will be required to cover five core areas – Jeddah, Mecca, Medina, Riyadh and Taif – with its own network in the first year. In addition, it will be eligible for roaming into Saudi Telecom’snetwork in the first four years of operation. It will also be required to list on the local stock exchange and offer 20 per cent of shares to the public immediately, rising to 40 per cent after three years.

The three prequalified consortia which declined to participate in the tender were: FAL Holdings, with Deutsche Telekom; Integrated Visions, with Maxisof Malaysia; and Mobilkom Saudi Arabia consortium, with Mobilkomof Austria.

‘I am very satisfied with the tender process so far,’ says the representative of one of the bidding consortia. ‘The procedure is being handled in a very professional and transparent way. It is also encouraging to see that international companies bid despite the kingdom going through a tough political phase at the moment.’

Bids for the second GSM licence went in after CITC sent out long-awaited clarifications in mid-June on the commercial provisioning applied by the government to the revenues of service providers. It is understood that under the new provisioning scheme, the GSM service provider will be required to pass on 5 per cent of its revenues in the first year of operations, which will rise to 10 per cent in the second year and to 15 per cent in the third year and thereafter. At present, the sole GSM operator in the kingdom, Saudi Telecom, passes on 20 per cent of its revenues to the government.

CITC has also invited ‘the companies to be licensed in accordance with the [telecommunications] act’ to ‘comment on all issues’ related to the development of universal access and universal service policies.

‘As far as universal obligations are concerned, we are now developing, for the Communications & Information Technology Ministry, a policy framework which we hope to implement in 2005,’ governor Mohammed al-Suwaiyel told MEED in May.

EFG-Hermes, Goldman Sachsand Riyad Bankare the financial advisers to CITC; Allen & Overyand The Allianceare legal advisers; and the UK’s Intercai Mondialeis technical adviser.