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Virgin Mobile wins one of three Saudi virtual telecom licenses

By Matt Smith

DUBAI (Reuters) - Virgin Mobile Middle East & Africa (VMMEA) is one of three companies to win a virtual telecom license in Saudi Arabia, the industry regulator said on Sunday, in the latest step to liberalize the kingdom's communications sector.

Five companies had bid for the Saudi mobile virtual network operator (MVNO) licenses. MVNOs not own the networks they use to provide communications services but instead lease capacity from conventional operators, usually paying them a percentage of their revenue as well as fees.

VMMEA, part-owned by British entrepreneur Richard Branson's Virgin Group, will launch an MVNO on former monopoly Saudi Telecom Co's <7010.SE> network, the Communication and Information Technology Commission (CITC) said in statement on its website.

Jawraa Lebara has joined with second-biggest operator Etihad Etisalat <7020.SE> (Mobily), while Dubai-based retailer Axiom Telecom will team up with Zain Saudi <7030.SE>.

Local companies FastNet and Safari were the losing bidders.

"The aim of these licenses is to improve the level of telecommunications services and information technology ... and to contribute to lower their prices, improve customer care, increase job opportunities for citizens and to stimulate competition," CITC said in the statement.

Saudi will become the second of the six Gulf Cooperation Council members after Oman to allow MVNOs.

Such virtual networks are widespread in Europe and other developed markets, but Gulf regulators have been reluctant to open their markets to more competition because most of the region's 15 mobile operators are ultimately government-controlled and are often a key source of state revenue.

The CITC did not state when the MVNOs would launch services, only that the winners now had 90 days to provide the necessary documents to move to the next phase of obtaining their licenses.

VMMEA has MVNOs in Jordan, South Africa and Oman. London-based Lebara Group has operations in the UK, Germany, France, Denmark, The Netherlands, Spain, Switzerland and Australia, according to its website.

(Reporting by Matt Smith; Editing by Greg Mahlich)

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