Qtel and STC vie for Syrian licence

STC sees clear business case despite 25% revenue fee
Only two companies remain in the bidding process for Syria's third mobile licence
Only two companies remain in the bidding process for Syria's third mobile licence


Qtel and STC are now the only companies remaining in the bidding process for Syria’s third mobile licence.The other three companies that had placed bids, Etisalat, France Telecom and Turkcell, abandoned the contest last week. Etisalat and France Telecom cited the terms of the licence, rather than political instability, as the main reason for abandoning the contest.

In particular, the companies appear to have been put off by confirmation from the Syrian government that the third licencee will be required to pay a 25% revenue share to the government. STC, Saudi Arabia’s incumbent operator, submitted its technical and operational offer for Syria’s third mobile license on March 30, while Qatari incumbent Qtel confirmed on Monday that it had submitted its financial and technical bids for the licence.

The two telcos will find out on April 14 whether they both progress to the auction, which will be held on April 27, Mohammad Al- Jalali, Syria’s deputy telecommunications minister, told news agency Bloomberg. He added that the auction will open with EUR 90 million ($128 million).

Ghassan Hasbani, CEO of international operations at STC, said he was undeterred by the 25% revenue share and that based on STC’s bid, there remained a “good business case” for acquiring the licence.

“The potential is still there and the potential doesn’t change with the revenue share. We looked at the business case, and given the market conditions in Syria right now and the potential in the market, there is still a good business case depending on how much you are willing to pay for the licence, so it is a trade-off between licence costs and revenue share,” Hasbani told CommsMEA.

“Of course, we have accounted for it [25% revenue share] in the licence fee calculations, and we have taken it into account in our models and forecasts,” he added.

The government of Syria announced in August 2010 its intention to award a third mobile licence. At the time, cabinet has also granted an initial approval to offer full mobile licences to Syria's existing operators, Syriatel and MTN Syria, which currently operate services under Build-Operate-Transfer (B.O.T.) agreements.

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