Saudis Unveil $1B Plan for Africa

Saudi Arabian company HiTs Telecom is making a major push into Africa, with an acquisition under its belt and a $1 billion investment plan. (See HiTs Expands in Africa.)

HiTs wants to set up eight operators by 2009 and another two in the third year, offering a range of mobile and fixed-line voice, 3G, WiMax, data, and international gateway services.

It's already gone some way towards that goal. HiTs acquired a universal service license in Uganda in March and picked up a 45 percent stake in Liberia's second largest mobile operator, LiberCell , in April, with an option to increase its holding to 75 percent by next year. (See HiTs Acquires LiberCell.) The company is also in discussions to acquire licenses in Tanzania and the Democratic Republic of Congo.

The African operations will come under the umbrella of HiTs Africa, a new company it's set up to manage its interests in the continent.

The move will be a win for equipment vendor Huawei Technologies Co. Ltd. , which has signed up as a technical partner to provide network rollout and management services, as well as lending its knowledge of local markets.

HiTs has also enlisted the help of Singapore-based MSM to provide project planning and management services, Squire Sanders for legal counsel and advice on regulatory issues, Devoteam for IT consulting, and Palace Venture Capital and Ithmaar Bank to provide financial advice.

HiTs Telecom owns several companies in the Middle East, where it's also in expansion mode. In Saudi Arabia it provides distribution services through its subsidiary Qanawat, retail mobile services through 4Run, and mobile payments via Q Pay. It's also part of the consortium behind Integrated Telecom Co. (ITC) , Saudi Arabia's second fixed-line service provider. In July 2006 HiTs acquired the third GSM license in Yemen, where it expects to launch its HiTs Unitel network in the second half of this year.

The company is set to open two other new subsidiaries: HiTs Distribution Yemen, which will act as a lead distributor for HiTs Unitel, and HiTs Distribution Egypt.

HiTs is among a number of Middle Eastern operators eager to tap into Africa's growth potential. The likes of Mobile Telecommunications Co. (MTC) , Qatar Telecom QSC (Qtel) , and Orascom Telecom have operators in the continent, which has a combined population of 900 million and an average telecom penetration of 20 phones per 100 people. (See Africa's Celtel Snags Development Funds and Qtel Spends $3.7B for Wataniya Stake.)

— Nicole Willing, Reporter, Light Reading