(Adds quote from new statement, background)
RIYADH, June 6 Etihad Atheeb Telecommunications
Co 7040.SE said it started on Saturday high speed internet in
Saudi Arabia's two largest cities, officially ending Saudi
Telecom's 7010.SE (STC) monopoly on fixed-line phone services.
The firm was starting operations in the Saudi capital Riyadh
and the Red Sea port city of Jeddah, it said in a statement
without specifying when it would begin voice services.
"Only 5.3 percent of the population have access to
high-speed internet ... and a quarter have slow dial up
internet," Chairman Prince Abdul-Aziz bin Ahmed bin Abdul-Aziz
said in the statement.
Atheeb is expected to face tough competition from STC and
two other firms that won licences last year to offer fixed-line
The two other firms are Optical Communications Co, led by
U.S. Verizon Communications Inc (VZ.N) and al-Mutakamilah
Company, which is led by Hong Kong's PCCW (0008.HK).
Internet will be crucial to the three new fixed-line
operators in presenting strong enough incentives to STC's
existing subscribers to switch to their networks.
Etihad Atheeb has said it plans to invest $1 billion over
five years in its fixed-line operation and wants to target
government and industrial hubs as well as regions covered
insufficiently by STC.
State-controlled STC slashed in March internet tariffs by 70
percent in the hope of capturing half of the internet users in
the Gulf Arab region's largest market as competition heats up.
STC in March had one million internet subscribers, Saeed
Dhafer al-Qahtani, STC's executive director for sales and
(Reporting by Souhail Karam; Editing by Ulf Laessing and Keiron