Third GSM operator on the cards

07 April 2006

Both the Council of Ministers (cabinet) and National Assembly (parliament) approved in early April the setting up of the state's third mobile operator. However, although both branches of government claim to want to introduce a new operator, they are at loggerheads over how to proceed.

The cabinet on 2 April took a decision to establish the operator within six months, and instructed the Kuwait Investment Authority (KIA) to conduct an economic and technical feasibility study. Under the plan, 40 per cent of the new company's shares will be sold to the public through an initial public offering (IPO), 50 per cent to pension funds, and the remaining 10 per cent to strategic investors.

The following day, parliament voted overwhelmingly to establish the new company, but with the difference that Kuwaitis should be given a grant by the government to buy new shares in the operator rather than interest-free loans, which was the government's original intention.

While it seems certain that a new mobile operator will be established, it remains unclear which branch of government will gain the upper hand. The cabinet has claimed that the parliamentary vote was illegal as the assembly has no power to set up companies. However the prospect of free shares is likely to be more popular with the public.

Kuwait already has a mobile penetration rate in excess of 90 per cent, and it will be difficult for any new entrant to make any immediate impression.

The two incumbent local operators, MTC and Wataniya Telecom, offer some of the most advanced GSM technology found in the region, and intense competition has seen prices among the lowest in the Gulf.

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