Verizon (News - Alert) Communications has cleared the initial hurdle for operating fixed-line networks in Saudi Arabia. The group led by Verizon is among the three to receive approval from the Saudi Communications and Information Technology Commission (CITC). Verizon's consortium includes the promising operator Millicom International Cellular (News - Alert). Hong Kong's PCCW and the Bahrain Telecommunications Co. also received the go-ahead.

 

Until now, state-run Saudi Telecom Co. has had a monopoly in the Saudi Arabian fixed-line market. The company boasts 4 million fixed-line subscribers which amount to a penetration rate of approximately 16 percent of the kingdom's population. The fixed-line coverage is poised to reach three regions of the kingdom in the next three years and the entire kingdom in seven. Internet penetration in the kingdom is quite low and stands at a mere 3 percent.

 

The three companies plan to go public with IPOs in a couple of years.

 

“All of them must offer a 25 percent stake of their capital to the public and 10 percent to state pension funds before the start of commercial operations,” said Abdulrahman al-Fehaid, deputy governor of the CITC, in a statement.

 

Verizon’s consortium has paid 5 million riyals ($1.33 million) as licensing fee.

 

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