By Raissa Kasolowsky
Third operator which launched in Aug. expects to turn a profit in its third year.
Zain Saudi Arabia, which drew almost one million subscribers just one month after its launch in August, expects to turn its first profit after its second year of operations, its chief executive said on Tuesday."Things are moving much faster than expectations," Marwan Al-Ahmadi told Reuters in an interview on the sidelines of a telecoms conference in Dubai.
Zain Saudi Arabia, an affiliate of Kuwait's Mobile Telecommunications Co (ZAIN), had almost one million subscribers at the end of September, about 90 percent of them pre-paid.
"After the second year of operation we will be profit-positive," Al-Ahmadi said.
Saudi Arabia's third telecom operator launched services on Aug. 26 and competes with incumbent Saudi Telecom Co and Etihad Etisalat (Mobily) in the largest Arab economy, home to about 25 million people.
Ahmadi said Zain wanted to expand its network coverage to between 93 and 95 percent of the vast desert kingdom within two years, a year faster than an earlier plan. Network coverage was now 55 percent, he said.
"Our ultimate aim is to get a third of the market," Al-Ahmadi said. "This is definitely not going to happen in the short term... I believe we should be able to achieve it in the range of five years."
A consortium including Zain, which has operations in more than 20 countries, paid $6.1 billion for Saudi Arabia's third mobile phone licence in 2007. Zain raised 6.3 billion riyals ($1.68 billion) in an initial public offering this year.
Ahmadi said he did not see the global credit crisis or the high inflation Saudi Arabia has seen in the past year as having a significant impact on their customer base in the kingdom, where penetration hovers around 100 percent.
"People will watch their spending but not to the point that something dramatic will happen," he said.
"The only impact I can see would be from [the decline in] the oil price, but we've been in much worse times, like when the oil barrel was being sold for less than $10."
Shares in Zain Saudi Arabia closed down 0.45 percent at 10.60 riyals on Tuesday, having lost more than 50 percent of their value since listing in March.
The Saudi benchmark has lost more than 55 percent since January as Gulf Arab markets have been hit by the global financial turmoil. (Reuters)