Ericsson Wins Saudi Network Contract

Sweden’s Ericsson, the biggest maker of mobile phone networks, said Sunday it won a contract worth as much as $800 million to more than double Saudi Arabia’s cellular phone system and make it the largest in the Middle East.

Ericsson, based in Stockholm, will install all the core equipment and part of the radio network to cover eastern and central Saudi Arabia, and its second-largest city, Jeddah, in the west, said James Borup, spokesman for the mobile phone division. Finland’s Nokia won a separate order worth at least $100 million to build a segment of the radio network, Saudi Telecommunications Co. said.

With 85% of capacity of 2.6 million subscribers already taken, the Saudi system is growing by about 120,000 users a month. The project in the country, the biggest Middle East economy, is expected to take about 15 months and marks a boost for Ericsson, whose shares have declined 71% in the last year.

“Work will start immediately,” Borup said. “This project will give Saudi Arabia the biggest [Global Standard for Mobile Communications] network in the Middle East.”

Ericsson’s share of the overall package is valued at $400 million to $800 million, said Ziad al-Otaibi, general manager of Saudi Telecom’s mobile phone division. The goal is to add as many as 2.8 million subscribers to the system, STC said.

“The figure of $800 million is the maximum it will be over the next two years,” Borup said. Nokia’s contract could be worth as much as $200 million, he added. Saudi Telecom will pay for the expansion from its own reserves, he said.