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Sun 16 May 2004 04:00 AM

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STC gears up for competition

Saudi Telecom Company (STC), the sole GSM operator in the Kingdom of Saudi Arabia, with more than 7.5 million mobile phone users faces competition for the first time with the entry of a second GSM operator anticipated by July 2004.

Saudi Telecom Company (STC), the sole GSM operator in the Kingdom of Saudi Arabia, with more than 7.5 million mobile phone users faces competition for the first time with the entry of a second GSM operator anticipated by July 2004.

Eleven consortia, including major regional operators, Etisalat, Orascom and MTC, have been selected as candidates for Saudi Arabia’s second cell-phone license. The impact of this dramatic development on STC and the restructuring of Saudi’s telecom industry will change the Saudi connectivity landscape by 2005 say industry analysts. The Saudi telecom market, which is growing at an average rate of 30% annually, is estimated to touch US$7.9 billion by 2007.

Khalid Abdullah Al Molhem, executive President, Saudi Telecom (STC), who will be discussing the Saudi telecom market at the upcoming Connect Telecom summit says, “The entry of a second GSM player is a welcome development, that we have anticipated and been preparing for since several months. STC is confident that a new player will expand the market, and drive further growth, rather than restrict STC’s market share. The penetration of the telecom sector here is less than the international average, which indicates that there is strong potential for growth in the Kingdom.”

Connect, which is scheduled to be held in Dubai, from May 30 to June 2, 2004 will feature case studies, presentations and key topics such as liberalisation in the regional telecoms market, 3G services, value-added services, building customer loyalty, leveraging new technologies, tackling fraud, rolling out prepaid and post-paid mobile services. 19 international and regional telecoms operators are expected to participate in the two-day event.

To gear up for competition, STC is currently pumping in six billion Saudi riyals annually in overhauling its network infrastructure besides beefing its value-added services to generate new cash streams. The state-run operator is also developing ‘incubators’ to encourage the development of new telecom technology. STC recently announced the addition of the ‘0’ digit to precede existing GSM numbers last month, which is expected to increase the available 10 million numbers tenfold in the next few years.

“Deregulation and liberalisation are set to change the face of the Middle East telecoms industry. While Kuwait and Bahrain were the first to do away with monopoly, Saudi Arabia’s STC is preparing to face competition for the first time. This situation is being replicated across the Gulf Cooperation Council (GCC) with the UAE and Oman also opening up their telecom sectors to new players,” says Sabine Enthammer, executive director, IIR Middle East, the organisers of the telecom event.

STC predicts the immediate impact of liberalisation will be a shift in prices in the face of increased competition. The decreased pricing will tap into previously unexplored markets within the Kingdom, allowing more consumers to avail of GSM services, increasing the market reach of operators, by expanding the cellular network infrastructure to remote areas in the Kingdom.

“I would also like to point out that STC has no intention of expanding operations beyond Saudi Arabia in the foreseeable future. Our focus will remain with the Saudi market and we are committed to offering the best possible services to our subscribers here,” adds Al Molhem.

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