Saudi Arabia has issued its first government-backed sukuk, or Islamic-bond this week in the Kingdom that amounted to the largest sukuk offering in Saudi’s history, according to reports.
The proceeds from the bond will finance the expansion of King Abdulaziz International Airport in Jeddah, which is located on the Red Sea coast. The bond was set for $4 billion.
It amounts to a bold step by a government seeking a more active capital market.
China’s Wen Jiabao will visit Saudi Arabia and other Gulf states at a delicate time as relations between the West and Iran sour but China looks to continue to receive Iranian oil.
According to this Bloomberg report:
“The Chinese premier’s trip starting tomorrow comes amid signs that tighter economic sanctions may stop Iran, OPEC’s second-largest producer after Saudi Arabia, from selling its oil. Wen will also visit Qatar and the United Arab Emirates, fellow members of the Organization of Petroleum Exporting Countries, during the Persian Gulf tour ending Jan. 19.”
The visit itself is an important gesture to the region. China’s impressive growth in recent years has led the people’s republic demand for oil to skyrocket.
Saudi Arabia will halt its planned $100 billion expansion program in the face of reduced international and economic pressure to do so, the Financial Times reports.
This makes it unlikely that the Saudis will continue to set 15 million BPD as their goal by 2020.
The comments come at a time when Saudi Arabia finds itself exhausted from continued capacity increases, and as it believes the capital may be better used on developing stronger natural gas and petrochemical sectors.
Saudi Arabia has domestic energy challenges that it must meet to sustain the ongoing period of economic growth and modernization. The Kingdom continues to consume more of its own oil to meet domestic demand, which threatens to cut into exports and consequently reduce revenues from selling oil to international buyers.
Other producers, regardless of OPEC affiliation, are also ramping up oil production.
Saudi Arabia will run a surplus this year despite increased spending, so the move is not necessarily for fiscal reasons, but the planned investment ($100 billion) is still an impressive sum for the G-20 member.
[Press Release] - DUBLIN–(BUSINESS WIRE)–Research and Markets has announced the addition of the “LTE in the Middle East and Africa: Contracts, Operator Reviews, Spectrum Strategies, Subscriptions, Pricing and Forecasts 2011 – 2015” report to their offering.
With commercial LTE launches by all three major incumbents, Saudi Arabia is not only leading the LTE adoption within the Middle East, but it is also pioneering TD-LTE adoption globally by becoming the first country to commercially offer TD-LTE user devices. Driven by early deployments, attractive free trial packages such as those offered by STC Saudi Arabia, bundled 3G/LTE pricing models, and the increasing demand for high-speed mobile broadband access in rural locations, Saudi Arabia will lead LTE subscriptions throughout the region with over 70,000 subscriptions by Q4’2011 and over 0.39 Million by Q4’2012, representing a YoY (Year-over-Year) growth of 457 %. By 2015, Saudi Arabia is expected to account for over 5.44 Million subscriptions representing a CAGR (Compound Annual Growth Rate) of 196.91 %, that is much higher that the worldwide CAGR of LTE adoption at 180% with a total of 410 Million subscriptions.
The UAE is also likely to follow suit, with commercial LTE devices for the Etisalat expected to be launched in December 2011, following a pre-commercial network release in September. Du is also expected to commercial launch its LTE network in due course, leading UAE’s LTE subscriptions to hit 40,000 by Q1’2012. From a spectrum perspective, although the 2.3 GHz TDD spectrum is likely to retain the highest market share, driven by Saudi network deployments. Re-farming of the sub-1 GHz spectrum bands is also expected by 2013, which will make the 1800 MHz the most sought after band.
Companies Mentioned:
For more information visit http://www.researchandmarkets.com/research/10cce3/lte_in_the_middle
Concern about the developed economies is now stemming from key developing ones, with Saudi Central Bank Governor Mohammed Al Jasser saying that “everyone” was concerned about the problems plaguing Europe and the United States, according to the Wall Street Journal and other outlets.
The article also reported that SAMA had no plans to revalue its currency, or to buy European debt.
Lucien Zeigler | 3/23/11
After three attempts to purchase a mobile phone business in Saudi Arabia, Alwaleed has succeeded in inking a deal for Zain Saudi for 950 million, Jeffery Towson of the Business Insider reports.
Towson provides some valuable business background to mobile deals in Saudi Arabia:
“Saudi mobile companies are classic value investing targets. There are only three mobile licenses so there is politically limited competition. And once the network is built, there is a fairly low cost of growth. It fits Buffett’s classic picture of a company with a sustainable competitive advantage and a low cost of per shareholder economic growth.”
Towson argues that the purchase is right from the Alwaleed “playbook.”
“For those not used to emerging markets’ value investing, this is a deal straight from the “Waleed playbook” and is worth studying. We have seen him do this same deal many, many times. Mainly because it really works.
We’ve written two reports on Prince Alwaleed bin Talal’s moves recently, one analyzing his 2010 performance and another recent one for SUSRIS highlighting his large bets on the Saudi market before the so-called “Day of Rage” protests, a sign that he believed the protests would fizzle before they began. He was right.
Another interesting point that is made by Towson, who is a managing partner at the Towson Group, is his assertion that “Public auctions in the Middle East attract too much capital and value-based investors, such as Waleed, bid based on what a company is actually worth.”
Why? We’re not sure, and Towson doesn’t answer this directly, but what he did note is that at last, Alwaleed got a low price for a Mobile deal, as there was only one other bidder. The author attributes this to the ”combination of political access, reputable capital, management and telco capabilities” which ”eliminates most all the competition for the deal.”
