Saudi Mobily to invest $1.1 bln in wireless expansion

RIYADH (Reuters) - Etihad Etisalat (7020.SE) (Mobily), Saudi Arabia's second mobile phone firm, said on Saturday it would spend at least 4 billion riyals ($1.07 billion) in the next two years building broadband and wireless networks.

Mobily, which lost a bid this year to run one of Saudi Arabia's fixed-line networks, has invested 5.2 billion riyals building its mobile phone network in the world's biggest oil exporter, since 2005, Chief Executive Khaled al-Kaf said.

"We will aggressively invest in fixed-line substitution," Kaf told Reuters by telephone.

Mobily would invest "at least 2 billion riyals a year" in 2008 and 2009 in mobile and broadband infrastructure, Kaf said.

Mobily bought Bayanat al-Oula, one of two firms licensed to deploy WiMax wireless Internet access network in the kingdom, earlier this year.

"We will have a very good level of expansion broadband and WiMax thanks to the purchase of Bayanat," Kaf said.

The company, whose third-quarter profit missed forecasts of five analysts, now commands a 40 percent market share and expects this percentage to grow next year despite the launch of a third mobile phone operator, Kaf added.

Mobily and incumbent Saudi Telecom Co 7010.SE will face new competition when Kuwait's Mobile Telecommunications Co (ZAIN.KW) (Zain) starts a third mobile phone firm next year with other investors.

"Expansion in data services and in rural areas will provide important growth potential," he said.

(Reporting by Souhail Karam; Editing by Daliah Merzaban)