Saudi Arabia Opens Telecom Sector, but not to Outsiders

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Last updated at: (Beijing Time) Monday, July 29, 2002

Saudi Arabia Opens Telecom Sector, but not to Outsiders

Saudi Arabia on Saturday decided to open its lucrative telecoms sector to competition - but kept the door closed to foreign investment.

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Saudi Arabia on Saturday decided to open its lucrative telecoms sector to competition - but kept the door closed to foreign investment.

The decision allows new operators in a sector that is monopolized by the state-owned Saudi Telecom Corp (STC), according to Minister of Post, Telegraphs and Telephones Khaled al-Qusaibi .

Al-Qusaibi said that new operators have to be publically held companies and that this should be done through a public offering to expand the ownership base.

The minister said that any foreign investment in fixed line and mobile telephone services would require a "political decision" and that the local expertise was sufficient to handle the telecoms sector.

Telecommunications is one of 19 sectors that are off-limits to foreign investors, but the government is currently reviewing the list.

The Saudi Government last year approved a bill passed by the Shura (Consultative) Council to end the state's monopoly of the telecoms sector without ruling out the participation of foreign investors.

The government has also set up the Saudi Telecommunications Commission, a regulatory body to supervise the opening up of the market to more companies.

Saudi Arabia has 22 million people. Last year, the STC selected Sweden's Ericsson and Finland's Nokia for a project to expand the GSM network.

Bahrain-based Gulf International Bank was appointed by the Saudi Finance Ministry in June to be exclusive financial adviser for the partial flotation of STC shares .

The Initial Public Offering for the STC, which has US$3.2 billion in capital, of 20 to 30 per cent of the shares, will take place before the end of 2002, al-Qusaibi said.

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