What has happened?

The telecoms regulator in the Kingdom of Saudi Arabia (KSA) has set a deadline of 4 May 2013 for companies to submit applications for three mobile virtual network operator (MVNO) licenses in the KSA, as the market opens up for further competition.

The winners of the licenses will be announced twelve weeks after the bid deadline, and companies must then launch their respective services within twelve months of the license being issued.

Why is this significant?

MVNOs do not own the networks they use to provide communications services. Instead, MVNOs buy wholesale access and services from network operators before repackaging and supplying them with their own branding and customer services, along with any additional bundled products, to end-users. The KSA is only the second country in the GCC, after Oman, to permit MVNOs. This is a significant evolution in the telecoms industry as it introduces more competition at the retail level.

Why should this interest you?

This development will interest both regional and international telecoms service providers as it represents an opportunity to gain a share of the KSA’s buoyant telecoms market. This is a sizeable market, with a population of around 30 million and mobile penetration rates soaring to the fourth highest in the world at 191 per cent, or nearly two subscriptions for every resident.

What happens next?

Although the deadline of 4 May is still some way off, potential applicants have a lot of work to do between now and then. The formal application requirements are numerable, detailed and complex. Most notably, applicants must pick one of the existing mobile network operators in the country to host the applicant and then negotiate a complete wholesale access and resale agreement with the host operator. The agreement must be submitted as part of the application and made conditional only on the licence being granted. Within the same timescale, applicants must also finalise and include with their application a “management agreement” with an international MVNO partner under which the partner agrees to assist in the provision of the MVNO services. As a first milestone/deadline, formal questions on the Application process must be submitted to the regulator no later than 4 February 2013.