Saudi Telecom sale sees hot demand

There was a large appetite for shares in Saudi Telecom

The sale of a 30% stake in Saudi Telecom, Saudi Arabia's biggest privatisation in over 20 years, has been more than three times oversubscribed.

The Ministry of Finance said it had offers totalling 36bn riyals ($9.6bn) for the initial public offering (IPO) of the country's sole telecoms provider.

Under the government's plans, 20% of shares have been put on sale to Saudi citizens, while another 10% are made available to two public pension funds.

The privatisation, which is expected to net the government $4bn after selling shares for 170 riyals ($45) each, is part of a wider economic reform programme to ease the government's 600bn riyal debt.

Eager buyers

The Saudi government announced plans to privatise part of its telecommunications network in September 2002.

Local banks that received the application details offered favourable loans to citizens and interest-free loans to their employees in order to encourage take-up of the offer.

A slow initial response to the sale was offset by heavy bidding in the last week.

Saudi Telecom's assets were valued at $11.4bn in September 2002. But economic studies have predicted this value will swell by another 20% once the company is listed on the local bourse.

The shares are due to list on the Saudi stock market in February and will become the second largest listed company in terms of capitalisation after the market leader Saudi Basic Industries Corp (SABIC).