Business | Telecoms
Saudi telecoms decision tipped to have positive impact
The decision taken by the Saudi cabinet on Monday increasing the volume of shares to be offered for public subscription and reducing the fees levied by the government for land and mobile phone services will have a positive impact in increasing citizens' investments in the telecom sector, according to local telecom experts.
- By Mariam Al Hakeem, Correspondent
- Published: 00:00 February 2, 2007
Riyadh: The decision taken by the Saudi cabinet on Monday increasing the volume of shares to be offered for public subscription and reducing the fees levied by the government for land and mobile phone services will have a positive impact in increasing citizens' investments in the telecom sector, according to local telecom experts.
The Saudi government decided to reduce its levied fees on the telecom sector from 15 per cent to 10 per cent.
A statement released following the Saudi cabinet meeting noted that the cabinet decided that any company licensed to provide mobile phone services has to float 40 per cent of its capital for public subscription while any new land phone company must float 25 per cent for public subscription
The decision comes at a time when eight Asian, European and African companies are competing to win the Kingdom's third mobile licence, which is expected to add 15 billion Saudi riyals to the state coffers.
In 2002, Saudi Arabia decided to open its lucrative telecom sector to competition. The decision allows new operators in a sector that was monopolised by the state-owned Saudi Telecom Company (STC).
The Saudi Telecommunications Company and the UAE's Etihad Etisalat (under the brand name Mobily) are the two companies currently permitted to operate in Saudi Arabia's mobile phone market.
In 2004, the Saudi government awarded the consortium, which is partly owned by the UAE telecoms operator Etisalat, the permit to set up and operate a mobile phone network worth 12.2 billion Saudi riyals.
Saudi telecom experts noted that the existing telecom companies would be the biggest to benefit from the new decisions, as these companies own the infrastructure for operating its services. But any new comers, who lack this facility, will face difficulties in operation, they observed.
The experts pointed out that the new government move aims at liberalisation of the telecom sector and opens the door wide to competition. They added that the decrease of the fees levied by the government would contribute in reducing the prices of service fees on customers.
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