Saudi Telecoms Company planning regional expansion

04 April 2011

Auction for third mobile licence in Syria to go ahead

Saudi Telecoms Company (STC) is pushing ahead with its regional expansion plans despite political unrest in the Middle East.

The operator is still firmly in the running for Syria’s third mobile licence after submitting its technical and operational offer on 30 March and is also looking to expand into Iraq.

“We will be making a list of all the opportunities and will analyse what will be beneficial for us before we bid,” says Hasbani.

STC net income
Q1 201045.3
Q2 201053.3
Q3 201087.9
Q4 201058.6
Source: STC

The operator’s $280m Shariah-compliant fund for its Bahrain unit, Viva, has not been affected by the turmoil in the country, according to Hasbani. The money will be used to fund innovation, technology and infrastructure roll-outs for further growth.

It is currently in the process of increasing its 51 per cent stake in Indonesian operator Axis to 80.1 per cent, which is due to close this month.

STC is one of five companies to have qualified for Syria’s third mobile licence, but over the past week it remains the only bidder alongside Qatar Telecom (Qtel).

Emirates Telecommunications Corporation (Etisalat) and France Telecom both pulled out of the bidding process citing concerns about the 25 per cent revenue share. Turckell also withdrew its bid, but did not announce a particular reason.

“Revenue share for government is not an uncommon practice in this region. All the bidders knew about it and it was not a surprise,” says STC chief executive officer Ghassan Hasbani. Similar models exist in the UAE, Iran, Saudi Arabia, Jordan and Oman.

“It’s not great, but it exists and we have accounted for it in the business plan,” he adds.

In an interview with MEED in February 2011, Hasbani admitted that STC missed the first phase of acquisitions in the region. The Syrian licence is a “last chance”to increase its footprint in the Middle East, according to one source at the operator.

So far the unrest in Syria, which began on 15 March and has since continued with reports of more outbreaks and violence, has not affected the schedule of the tender. The final financial phase of the auction will be held on 27 April.

Syria’s Ministry of Communications was not available to comment.

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