Saudi Arabia’s telecoms regulator is set to award mobile virtual network operator (MVNO) licenses to three companies after receiving bids from five, provided the winners meet all the necessary requirements within a 90-day period, according to press reports.
Virgin Mobile Middle East and Africa (Dubai, United Arab Emirates), partly owned by Richard Branson’s Virgin Group (London, UK) has emerged as one of the successful companies, and looks set to provide services over the network of Saudi Telecom (Riyadh), the country’s incumbent operator.
Axiom Telecom, a retailer based in Dubai, is to partner with Zain Saudi (Riyadh), while Jawraa Lebara teams up with Mobily (Riyadh, Saudi Arabia), the country’s second-biggest mobile operator, owned by Etisalat (Abu Dhabi) of the United Arab Emirates.
Meanwhile, Fastnet and Safari, two local companies, appear to have lost out.
MVNOs operate by renting capacity from network operators and often struggle because their profit margins are necessarily thinner and their ability to innovate constrained by their lack of infrastructure.
Nevertheless, regulators in the Middle East have been largely reluctant to license MVNOs because of the challenge they pose to traditional operators, many of which remain at least partly owned by government authorities.
Besides Saudi Arabia, Oman appears to be the only other of the Gulf Cooperation Council’s six members to have awarded MVNO licenses.
Saudi Arabia invited companies to bid for the three MVNO licenses in January.
“Licensing of MVNO services is considered as an important step in the liberalization of the telecoms market in Saudi Arabia, and is aimed at providing more choices for users of communications and information technology services,” said the regulator in its invitation statement.
“It is also expected to provide users with new applications and innovative services, improve customer care, and to encourage further new investment as well as providing additional opportunities for employment of young Saudis in this important sector,” it added.