Saudi telco regulator to re-tender piggyback mobile licence

DUBAI, April 9 Wed Apr 9, 2014 8:17am EDT

DUBAI, April 9 (Reuters) - Saudi Arabia's telecom regulator will re-tender a licence for piggyback services on mobile operator Zain Saudi's network, nearly a year after naming Dubai-based retailer Axiom Telecom as the provisional winner.

The Communications and Information Technology Commission's (CITC) decision, is a setback for Zain Saudi, which is facing competition from other mobile virtual network operators (MVNO) that will launch soon on rivals' platforms but will not be in a position to collect revenue from its own.

MVNOs lease capacity from their host operator, usually paying them a percentage of revenues as well as fees.

The regulator announced the new tender on its website on Tuesday.

It did not say why it was re-tendering the licence, but Axiom chief executive Faisal al-Bannai told Reuters his firm had been unable to submit a document the regulator required.

"We have resolved that issue and will be submitting our tender in the next 48 hours," Bannai said.

The regulator had ordered the kingdom's three mobile operators - Zain Saudi, Saudi Telecom Co (STC) and Etihad Etisalat (Mobily) - to each host an MVNO, announcing the preliminary winners last June.

In March, the regulator confirmed the award of MVNO licences to Virgin Mobile Middle East & Africa (VMMEA), which has teamed up with STC, and London's Lebara Group, which Mobily will host.

Virgin and Lebara expect to launch services by the end of June.

The bid deadline for Zain Saudi's MVNO is June 2, with the regulator due to announce a winner within 12 weeks of that date.

"All three MVNOs should start at the same time when all will be ready," Hassan Kabbani, chief executive of Zain Saudi said.

However the regulator told Reuters that the launch of Virgin and Lebara's services was independent of whatever happened with Zain Saudi's MVNO.

Lebara last month said it would provide low-cost telecom services to migrant workers, which have been among Zain Saudi's core customer base - 94 percent of the company's subscribers are on prepaid contracts, who typically spend less on telecom services than those on monthly accounts.

Axiom, which shelved plans to go public in 2010, has about 600 shops in the Gulf, but has not previously run an MVNO. The application criteria states bidders must have MVNO operations in a minimum of two countries and a total subscriber base of at least 250,000.

Axiom's Bannai said his firm had partnered with a foreign MVNO company but declined to provide further details. (Reporting by Matt Smith; Editing by Erica Billingham)