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Regulation

MTC Bids $6.1B for Saudi Mobile License

Kuwait-based Mobile Telecommunications Co. (MTC) is to shell out 22.91 billion Saudi riyals ($6.11 billion) for Saudi Arabia's third GSM license, the highest amount ever paid for a telecom license in the Middle East. (See MTC Wins SA Bid.)

The Saudi regulator, the Communication and Information Technology Commission (CITC) , said in a statement issued today that MTC's offer surpassed the next highest bid by $1.4 billion. A consortium that included India's Bharti Airtel Ltd. (Mumbai: BHARTIARTL) had offered 17.26 billion riyals ($4.6 billion). The bid is subject to evaluation and submission to the government's Council of Ministers before final approval. (See CITC Opens Bids.)

MTC's bid is nearly double the $3.25 billion Etisalat paid for Saudi Arabia's second mobile license in 2004 -- previously the most expensive license in the region. MTC also participated in that auction.

The operator noted in a statement that Saudi Arabia is one of the most attractive markets in the Middle East. It has the largest population in the region at 26 million and the largest economy in the Middle East and Africa. GDP growth clocked in at around 12 percent in 2006. The country also has the region's lowest mobile penetration rate at around 70 percent and is highest in average revenue per user (ARPU) at $35.

MTC says it expects to launch Saudi operations in early 2008, taking on incumbent Saudi Telecom Co. (STC) and Etisalat'sEtihad Etisalat Co. (Mobily) . The license includes permission to provide 3G services.

The Kuwaiti company holds a 50 percent interest in the bidding consortium, which will be cut in half as part of a mandatory IPO of 40 percent. Another 25 percent stake will go to its Saudi partners, while the remaining 10 percent will be held by the Saudi government. MTC itself is aiming to go public on the London Stock Exchange in the first quarter of next year.

MTC has been on a massive spending spree over the past few years to expand out of the saturated Kuwaiti market. It acquired Sudanese Mobile Telephone Co. Ltd. (MobiTel) for $1.33 billion last year and took a majority stake in Nigerian operator Vmobile for $1.01 billion. (See Celtel Takes Control of Vmobile.) It lost out to Etisalat in the auction for Egypt's third mobile license.

MTC and its subsidiaries have more than 27 million subscribers across six countries in the Middle East and 14 in Africa. MTC has announced plans to reach 70 million customers and raise its market capitalization by almost $10 billion to $30 billion by 2011 as part of its "ACE" strategy: Accelerating growth in Africa; Consolidating existing assets; and Expanding into adjacent markets. (See MTC Reports 2006.) Last month the company said it would set up a $10.5 billion fund to invest in its operations in Africa.

— Nicole Willing, Reporter, Light Reading

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