Saudi Telecom eyes partnership for domestic market

Saudi Telecom eyes partnership for domestic market

Saudi Telecom Co is keen to take on a partner willing to offer services over its wireless network, an executive at the former state telecoms monopoly said on Wednesday.

March 6, 2012 1:54 by Reuters

The local regulator, The Saudi Communications and Information Technology Commission (CITC), has already indicated that it is willing to issue three licences in 2012 to mobile virtual network operators (MVNO), which lease excess network capacity from telecoms operators in order to provide their own branded, customised mobile services.

When asked whether Saudi Telecom would like to have an MVNO partner, Saad al-Qahtani, group chief executive for strategic operations, told reporters on the sidelines of a conference in Doha: “We would love to have (one).”

MVNO partnerships are common in Europe and the United States. In the Gulf, only Oman has issued MVNO licences, with other governments seemingly keen to protect existing operators.

Qahtani also predicted termination fees – effectively the minimum local call charge – would be cut, having stayed unchanged for about four years.

“Termination fees are going to decline,” said Qahtani. “There is a plan with the regulator for the termination fees and we are working with them.”

The likely cut in termination fees comes after Saudi’s rival operators Etihad Etisalat (Mobily) and Zain Saudi became embroiled in a price war last year in what is already a highly saturated market.

Mobile penetration rates in the Gulf are among the highest in the world, with nearly two phones for each person in Saudi Arabia.

This war hurt domestic call margins and Qahtani said he hoped that the scramble for subscribers would not translate into unsustainable business models.

“If you look today at international (calls), it’s 15 halalas, it’s even cheaper than local calls,” said Qahtani. “It depends on the operators – I think they have to stop it. You cannot sell below cost.

“I’m very afraid about value erosion either in broadband or voice. We have to be mature enough to preserve value.”

All this comes against the backdrop of income from data services outpacing voice services, a common trend in maturing mobile markets.

“Voice is declining every year,” said Qahtani. “My personal expectation is that within three years it will decline sharply.” (Reporting by Matt Smith and Regan Doherty; Editing by Reed Stevenson)