Saudi Zain eyes profit following IPO launch

Riyadh: Prince Dr Hussam bin Saud bin Abdul aziz, chairman of the Saudi Zain company, the third mobile operator in Saudi Arabia, said he expects the company to start generating profits three years after launching its services.

Saudi Zain, an affiliate of Mobile Telecommunications Company (Zain), yesterday floated 700 million shares in an initial public offering (IPO).

Unified network

Prince Hussam told reporters on Saturday that the company is operating in 22 countries in the Gulf and Africa.

He added that the company's customer base exceeds 42 million and it has more than 15,000 employees.

Hussam pointed out that the market value of the company is now nearly $26 billion.

The strength of the company lies in its unified networks in most of the countries where it operates including Kuwait, Bahrain, Iraq, Jordan and Sudan.

Innovative plan

"After a short period of time upon launching services in Saudi Arabia, we will try to treat calls by customers on our networks in neighbouring countries as local calls. We will not charge them the costs of international calls," Hussam said.

"This is one of the advantages we are focusing on and within it we will try to have the largest number of customers and acquire the biggest share of mobile phone users in Saudi Arabia," he added.

Hussam emphasised that the company will not engage in a price war, and that it will work on offering new and distinguished services using the most advanced products and technologies.

Third largest IPO

Meanwhile, the first day of the company's IPO attracted a high turnout of investors.

The IPO will contine for ten days and is expected to raise 7 billion Saudi riyals ($1.86 billion).

The allocation of shares will be performed in two stages. In the first stage, each subscriber will receive 50 shares.

In the second stage all subscribers will be allocated a maximum of 1,000 shares each.

This is the third largest IPO in the history of the Saudi market after the Saudi Telecom IPO in 2003 that had a value of 10.2 billion riyals and the Saudi Kayan initial public offering in the second half of last year, which generated 6.7 billion Saudi riyals.

Competition ahead

Saudi Zain, the third largest Arab telecom operator by market value, owns 25 per cent of the new company.

Last year it agreed to pay 22.9 billion Saudi riyals ($6.1 billion) for Saudi Arabia's third mobile phone licence.

Saudi Zain will compete with state-controlled Saudi Telecom Company and Mobily, an affiliate of etihad etisalat telecommunications company.