By Mohamed Abu Meleeh:
Saudi Arabia’s telecommunications sector is a key factor in the progress of the country’s economy and is seeing strong growth amid positive macroeconomic indicators.
A number of telecom analysts surveyed by Mubasher see that the positive sides in the sector should not be hurt by the current disputes faced by its constituent companies.
However, they urged the Communications and Information Technology Commission (CITC) to play its role fully in order to protect shareholders and the overall industry.
Earlier this week, Etihad Etisalat (Mobily) said in a statement to Tadawul that it has requested referral to arbitration with regard to its due receivable amounts resulted from the service agreement signed with Saudi Zain on May 6, 2008 regarding providing services that include national roaming, site sharing, transmission links, and international traffic.
Mobily said both parties have appointed their respective arbitrators, adding that appointing an umpire is under process.
Turki Fadaak, head of research, Albilad Capital, said there should be a separation in view for the telecom sector with its strong potential and the current disputes between its listed companies.
Speaking to Mubasher in a phone call, the analyst pointed out that telecom companies relied in generating revenues mainly on telecommunications in the past.
However, these companies began nearly five years ago to rely on data transfer in its revenues, and thus the sector was close to be business oriented.
Commenting on Zain, Fadaak said that the operational and managerial policies adopted by the company were not favorable for the market upon inception, as it forayed into an already saturated market.
For his part, Mazen Al Sudairi, head of research, Alistithmar Capital, said that the sector is not facing any difficulties, given strong economic growth.
Some companies inside the sector are facing difficulties, Al Sudairi said, noting that STC had seen some difficulties but managed to end them through divesting some of its overseas investments and began to record strong growth.
However, the analyst did not rule out a negative impact from the current row on the sector movement, saying “the situation is worrying given the problems these companies are facing.”
Al Sudairi also warned that STC might become again the only major player in the sector, given the difficulties facing other companies, as Etihad Atheeb has accumulated losses, Zain is seeking to reduce its capital for the second time and is continuing to log losses, Mobily has accounting and managerial problems, while Almutakamela is suspended.
CITC should shield shareholders in such companies and should also protect the whole industry, the analyst said.
Translated by Sayed Abdel Rahman
Photo Credit: Arabianeye-Reuters