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MTC makes highest bid for third mobile licence in the Kingdom of Saudi Arabia
:: 25 March, 2007
The MTC-led consortium announces that it has been successful in making the highest bid for the third mobile telecommunications licence in the Kingdom of Saudi Arabia (“KSA”) having bid SAR·22.91 billion (US$6.109 billion). The award of the licence is subject to approval from the KSA’s Council of Ministers.
This licence will give MTC a presence in the largest market in the Gulf Cooperation Council (“GCC”) in terms of population and the largest economy in the Middle East and Africa, reinforcing MTC’s position as a leading emerging markets operator.
Commenting on the transaction, Dr. Saad Al Barrak, Chief Executive Officer of MTC, stated: “We are delighted to have made the highest bid and look forward to confirmation of being awarded the third mobile licence in the attractive Saudi mobile market. We have a strong consortium of Saudi partners, the most achievable synergies, and the operating expertise to bring world class services to the people of Saudi Arabia. This success underscores MTC’s leadership position in the Middle East and beyond and recognizes the trust that the KSA has placed in us.”
MTC currently holds a 50% interest in the consortium which will be reduced to 25% following a mandatory initial public offering (“IPO”) of the new mobile operator in the KSA and allocations to two government entities.
The expected launch date of MTC’s services in the KSA is early 2008.
Key highlights
Saudi Arabia is a key regional market
- the largest GCC market with a population of 26 million
- the largest economy in the Middle East and Africa with a GDP of US$350 billion and high GDP growth (around 12% in 2006)
- adding Saudi Arabia gives MTC a total footprint covering 494 million people, including in the Middle East, where it has a presence in Kuwait, Jordan, Bahrain, Iraq, Lebanon, Sudan and now Saudi Arabia
Saudi Arabia is a fast growing and attractive market
- low mobile penetration of approximately 70% compared to an average penetration rate of 118% for the GCC (excluding KSA and Oman)
- young (58% of the population is below 25 years old) and fast growing population (around 3% in 2006)
- high ARPUs of around US$35
- attractive market fundamentals with only two existing mobile operators and low fixed line penetration of 16%
- low broadband penetration of 0.4% underpinning the potential for 3G services in the KSA
The MTC-led consortium is best positioned to maximise value creation
- MTC’s regional roaming, branding, skilled human resources, and best practices will bring immediate benefits to the consortium. MTC has operations in five countries neighbouring the KSA
- MTC has unrivalled greenfield roll-out experience having successfully launched networks in 11 countries across the Middle East and Africa
- MTC intends to leverage its existing product portfolio in the Middle East and will deploy next-generation network infrastructure to provide a wide range of voice, high-speed data and advanced value services to drive its revenue share in the Saudi Arabian market
- a reduced network opex and capex and faster time-to-market will be achieved through initiatives with both incumbent KSA operators on site sharing, transmission infrastructure leasing, national roaming and interconnection
Strong local partners provide additional support and expertise
- MTC’s local consortium partners include a number of distinguished Saudi Arabian businesses, including Saudi Plastics Factory, Almarai Company, Rakisa Holdings and Al Jeraisy Development Company
Transaction details
The award of the licence is subject to approval from the KSA’s Council of Ministers. Following receipt of this approval, the Consortium is required to fund 80% of the licence cost within 3 weeks. The remaining 20% is to be paid within 2 weeks of incorporation of a Joint Stock Company, anticipated towards the end of 2007.
MTC is obliged to offer 40% of the company to the public following incorporation of the Joint Stock Company. An additional 10% of the shareholding is to be allocated to the Public Pension Agency and the General Organization for Social Insurance, 5% for each.
MTC will account for its holding as an associate and will have full operational control over the business.
UBS Investment Bank acted as sole financial adviser to MTC on this transaction.
About the MTC Group
The MTC Group is a pioneer in mobile telecommunications in the Middle East and on the African continent. The company was incorporated in 1983 in Kuwait as the region’s first mobile operator and since the initiation of its “3x3x3” profitable expansion strategy in 2003, it has grown very rapidly.
MTC is a leading mobile operator, now in 6 Middle Eastern (soon KSA) and 14 sub-Saharan African countries with over 12,700 employees, providing a comprehensive range of mobile voice and data services to over 27 million active individual and business customers (as of December 31, 2006).
The company already operates in Kuwait and Bahrain as mtc-vodafone, in Jordan as Fastlink, in Iraq as mtc atheer, in Lebanon as mtc touch, in Sudan as Mobitel and in 14 sub-Saharan countries in Africa as Celtel: Burkina Faso, Chad, Democratic Republic of the Congo, Republic of the Congo, Gabon, Kenya, Malawi, Madagascar, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia.
In January 2007, MTC launched ACE-an implementation strategy to realize the target of the 3x3x3 vision. ACE seeks to extract superior value from existing assets through three main thrusts: Accelerating the growth in Africa; Consolidating the existing assets; and Expanding into adjacent markets.
Based on organic growth and through ACE, MTC’s new goals by the year 2011 are to:
serve 70 million customers,
attain a US$6 billion EBITDA
reach a market capitalization of $30 billion, becoming one of the top 10 mobile operators in the world.
Contacts
MTC
Ibrahim Adel KW +965 9006779 Call / i.adel@mtc.com.kw
Antoine Aboukhalil LB +961 3733880 Call / a.khalil@mtc.com.lb
Martin de Koning NL +31 655822409 Call / dekoning.m@celtel.com
M:Communications
Ed Orlebar GB +44 7738724630 Call / orlebar@mcomgroup.com
Sarah Hamilton GB +44 7836295291 Call / hamilton@mcomgroup.com
Release link: http://www.mtctelecom.com/muse/obj/portal
