STC prepares for busy first quarter

16 November 2001

Saudi Telecommunications Company (STC)is understood to be preparing to issue by March a tender for the expansion of its fixed network by 400,000 lines. Industry sources say they expect this to be part of a flurry of activity in the local telecommunications sector in the first half of next year.

Other developments will include STC's preparation for an initial public offering (IPO), the launch of prepaid GSM services and a major campaign to increase the use of wireless application protocol (WAP) and the internet. The new year is also expected to see the launch of a second GSM licence (Saudi Arabia, MEED Special Report, 30:11:01).

A tender for some of the fixed-line expansion work had been expected this year after a substantial portion of work was dropped from a major contract awarded in June. Four companies were then awarded contracts to expand the network by 450,000 lines, some 150,000 fewer than were originally tendered. The scope of work was downgraded due to budgetary pressures, and the exact size of the new expansion cannot be finalised until STC confirms its budget later this month. The company is preparing the specifications for the work, which will be carried out in all parts of the kingdom.

There are no immediate plans for a further expansion of the GSM network. STC in March said it expected the network capacity would have to be increased by 1 million lines a year for the next four or five years to meet demand. However, the award in August of contracts to Sweden's Ericssonand Finland's Nokiato expand the network by some 2.6 million lines has satisfied mid-term capacity concerns.

The next major development in the GSM sector will be the launch of a second operating licence to run alongside that of STC. Industry sources say they expect the selection process for a new licensee to begin in the first half of next year. The timing of the launch will be determined by the Saudi Communications Commission (SCC), which is being set up under the leadership of Mohammed Mulla. SCC will also play a part in overseeing STC's proposed IPO. Industry sources say they expect the company to divest about 10 per cent of its shares to local investors in March. SCC is expected to be operational by the end of the year.

STC is also planning to launch a number of more advanced services. A prepaid GSM service is to be on the market by the end of February. WAP technology is already available in the kingdom, but is only used by 0.2 per cent of the population. STC is preparing a major marketing campaign to increase its use along with that of high-speed data and internet services.

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