The telecoms firm will own 26 per cent of a new company that will start offering mobile services in Kuwait early next year.
Another 24 per cent of the company will be held by government agencies and 50 per cent will be floated on the Kuwait Stock Exchange, where only Kuwaiti nationals can buy shares.
Saudi Telecom has said it is hopting to win 30 per cent of the market in Kuwait over the next 10 years.
A consortium led by Kuwait Finance House submitted the second highest bid of KD195m ($711.7m). Etisalat came third with a bid of KD180m ($656.9m).