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Qatar, Saudi left standing in Syria telco licence bid

Qatar Telecom makes bid for Syria licence; Move follows offer from Saudi Telecom for licence; France Telecom, Etisalat, Turkcell withdrawn; Trio cite onerous conditions of bid

April 4, 2011 4:48 by

Three major telecom companies have withdrawn from bidding for Syria’s third mobile telecoms licence leaving the way clear for Qatar Telecommunications <QTEL.QA> and Saudi Telecom Co <7010.SE> to fight it out.
The three — France Telecom <FTE.PA>, the UAE’s Etisalat <ETEL.AD> and Turkcell <TCELL.IS> — were unhappy with some of the licence requirements, Syria’s telecoms ministry said, including a 25 percent tax on revenue and a state monopoly over infrastructure for seven years.

All three pulled out last week.

“Ultimately it comes down to cost, but STC and Qtel both have experience of working in similar markets and Syria offers one of the few interesting opportunities in the region for a completely green field operation,” said Martin Mabbutt, Nomura telecoms analyst.

“Syria can afford to set the bar fairly high and it still has two bidders.”

Syria has been rocked by anti-government demonstrations in which dozens of people are reported to have died. The protests pose the biggest threat yet to president Bashar al-Assad’s 11-year rule, but Syria’s telecoms industry is relatively under-developed and offers attractive growth prospects.

The country’s mobile penetration was 33 percent in 2009, according to data from the International Telecommunications Union, against an average of 62 percent in Arab states as a whole.

“Qtel confirms that it has submitted both the financial and technical bids for the third licence in Syria,” Qtel wrote in a statement emailed to Reuters.

On Saturday, STC said it had submitted an offer for the Syria licence. [ID: nLDE73101O]

Syria’s two existing mobile phone operators are South Africa’s MTN <MTNJ.J> and Syriatel, which is mostly owned by Syrian businessman Rami Makhlouf.

“Syria currently has a pretty even duopoly between Syriatel and MTN,” said Nomura’s Mabbutt.

MTN has a build, operate and transfer licence, under which it has constructed a local network the Syria government owns, deterring MTN from investing heavily in the country, Mabbutt said. The licence terms will soon be amended to enable MTN to become a full commercial operator ahead of the third licence launch, he added.

(Reported by Matt Smith, Editing by David Holmes and Mike Nesbit)

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