Saudi Telecom IPO due in December

Saudi Telecom Co.'s (STC) initial public offering (IPO) is due in December and will be offered at very competitive rates, says its president, Khalid Al Molhem.

STC will offer up to 30 per cent in the offer, open only to Saudi investors. There is no special portion marked for its employees, the official added.

The total size of the IPO will be $3 billion. On listing, STC intends to bring in the highest transparency process, including quarterly financial reports.

The STC IPO represents the biggest opportunity for the Saudi stock markets to build upon. Investor confidence on the country's bourses, the highest capitalised in the region, has been in retreat in recent months.

STC, the biggest telco in the Middle East, is not interested in bringing in any strategic investor, said Al Molhem. "STC is already being run profitably and on a professional basis by the present management. There is no room for any strategic partner," said Al Molhem.

STC also sees no need for any immediate investments in the third generation (3G) mobile network since its viability is yet to be commercially proven, said the official. The kingdom currently has a mobile phone subscriber base of 4.5 million. But the biggest growth would obviously come from Internet usage which, at around 1.4 million, has lots of room to improve.

"We are constantly reviewing our tariffs and will reduce them depending on factors such as the volumes. Within the region, the UAE offers the most competitive rates."

Some form of regulation governing corporate transparency would be much better than having to make do with less, according to Al Molhem.

"The right sort of regulations can set a good business environment and should not be a hindrance to foreign investors wishing to come into the region. The important thing is to have a legal system in place," said Al Molhem during a session on 'Corporate Governance: Meeting the New Requirement'.

The Saudi official's comments went against the general sentiments being expressed on the issue - which was that over-regulating how a company should report on its performance could prove detrimental and even impact on how it conducts its operations.

The issue has assumed significance lately since the wave of corporate mis-governance issues that have wracked the U.S. financial sector. As far as the Middle East is concerned, these are still early days yet for corporate governance, said Al Molhem.

"There are no set standards in most of the region. Corporate governance dictates that companies set standards on strategies and reporting to its investors," said Al Molhem.

"But there are other laws which are now being taken up like those relating to the capital market. There is a direct relationship between the capital market of a country and the growth of its GDP."