For sale: US$35,000 shot at a telco tender

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Each week Arabian Business turns the spotlight on a leading company.

What's up with KIA?

The Kuwait Investment Authority (KIA) has invited companies to bid for a 26% stake in the country's third mobile company.

Sorry, but haven't I heard that before?

Yes, interested bidders initially had until the end of July to apply for the stake as well as pay a non-refundable US$35,000 in order to obtain a copy of a Request of Intent Document (RFI) before being considered. KIA has delayed the deadline twice as well as announced the 10 shortlisted companies which include consortia lead by Abu Dhabi-based Etisalat, and an unnamed international operator bidding with Nour Financial Investment Company.

So, in essence, KIA's changed the rules?

I guess so, yes. This latest announcement follows the second delay at the end of August in which KIA also said it would change the way in which the sale would be conducted. As well as inviting new parties to enter the bidding stakes, the final process has also been slightly amended. The winning company will now be the one that bids the highest price. There were also reports last month that KIA had announced that it had decided to exclude foreign companies from the auction, but this announcement was proved to be wrong.

Can you clear up the bidding rules, then?

The rules are fairly standard. Foreign telco companies are allowed to bid as are companies listed on the Kuwait Stock Exchange, either as members of a consortium or individually.

That's easy enough, but do they still have to pay the money to enter?

Yes, the new parties must now pay the non-refundable fee as well as show a commitment to maintaining a founder's ownership for a minimum of five years if they are the winning bidder. Perspective buyers now have until October 21 to register, pay and answer the tender participant's questions.

That's a lot of cash before they've even won! The prize must be worth it?

The highest bidders will then become owners of a 26% stake in Kuwait's third telecoms company. The government will offer 50% of the company in a public offering and retain 24%. According to Dr Abdul Karim Saleem, minister of communications, the winning company is expected to provide customers with more choice and develop new mobile services to compete with the two existing network providers.

So they've paid the money, won the prize, what's the competition like?

The third operator will compete for users with the Gulf's second largest telecom, Mobile Telecommunications Co (Wataniya Telecom), and MTC (Zain).

Delays aside, when can I buy my new Kuwaiti SIM card?

According to sources you could be picking one up as early as next year.

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READERS' COMMENTS

Zain & Wataniya
Posted by Thomas, Kuwait, Kuwait on Wednesday 31 October 2007 at 17:00 UAE time

The competition for the 3rd operator would be Zain (formerly known as MTC) and Wataniya (also known as NMTC).

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