Verizon and Others Land Initial Approval for Saudi Fixed-Line Networks

Verizon Communications is leading one of three consortia approved by the Saudi Communications and Information Technology Commission [CITC] to operate fixed-line networks in Saudi Arabia. The other groups are led by Hong Kong's PCCW and the Bahrain Telecommunications Co., respectively. The approvals mark the end of the monopoly of Saudi Arabia's state-run Saudi Telecom Co., which has about 4 million fixed-line subscribers (a penetration rate of approximately 16% of the kingdom's population). Internet penetration is minimal at just over 3%. The three companies are expected to sell shares in IPOs before the end of next year, according to Abdulrahman al-Fehaid, deputy governor of the CITC. "All of them must offer a 25% stake of their capital to the public and 10% to state pension funds before the start of commercial operations," he said. Verizon's consortium, which includes emerging markets telecom operator Millicom International Cellular, has paid a licensing fee of 5 million riyals ($1.33 million). Fixed-line coverage is forecast to reach at least three regions in three years and the whole kingdom in seven.

Sources: Press release, MarketWatch, Reuters
Commentary: How Verizon's FiOS Will Change the Face of the Telecom Industry • Millicom International Cellular: Lots To Like • Worldwide Fiber to the Home: Stakeholders And Shareholders
Stocks/ETFs to watch: Verizon Communications Inc. (VZ), Millicom International Cellular SA (MICC). Competitors: AT&T Inc. (T), Qwest Communications International Inc. (Q), Sprint Nextel Corp. (S). ETFs: iShares Dow Jones US Telecom (IYZ), iShares S&P Global Telecommunications (IXP), First Trust Morningstar Div Leaders Idx (FDL)
Conference call transcripts: Q4 2006

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