Mumtalakat, the Bahrain government holding company, has started the sale of its stake in Bahrain Telecommunication Company [Batelco], Mumtalakat’s chief executive officer Talal al-Zain told mergermarket. “We have already invited a few companies to submit initial bids,” he said. Al-Zain declined to immediately comment any further on the transaction. The size of the stake on offer was not disclosed.

A source familiar with the process, however, said that at least a 37% stake was for sale and the second bidding round was currently underway, with price and social package the two main factors under consideration. The source pointed out bidder commitments to leaving the headquarters in Bahrain or guaranteeing Bahraini jobs could prove decisive.

Saudi Telecom and Etisalat appear to be strong contenders to go through to the next round, where only a handful of bidders will be left, the source added. Neither company could be reached immediately for comment.

Mumtalakat holds a direct stake in Batelco of 37% and a further 33% of Hawar Holding Company, which owns a 20% stake in the integrated telecommunications company.

The source said that the 37% stake was for sale but that it remained unclear whether the 20% stake indirectly held by Mumtalakat was also to be sold. The source added, however, that a controlling stake was likely to be sold eventually. The sale process could be completed within one or two months maximum, according to the source.

The Bahraini government’s total stake in the listed telco is 75%, with the remaining shares listed on the Bahrain Stock Exchange. In addition to Mumtalakat, the government’s stake is held through the Pension Fund Commission and General Organisation for Social Insurance, which, as the merged Social Insurance Organisation, own a direct stake of 18% and two-thirds of Hawar Holding.

Batelco was the first fixed line operator in the kingdom but now competes with 2Connect and Nuetel Communications for market share. It is one of two mobile operators in the kingdom and has 600,000 domestic mobile customers, according to its website. It has subsidiaries in Egypt, Jordan, Kuwait and Yemen and is launching mobile operations in Saudi Arabia.

A spokesperson for the Telecommunication Regulatory Authority [TRA] said that it has no knowledge of the sale. The TRA has yet to receive an application to amend Batelco’s licence in light of a change to its share ownership structure, as required under the terms of its licence, said the spokesperson. The application to change the licence is made during the sale process and is channeled through the Ministry of Commerce, the spokesperson said.

Mumtalakat is in the process of evaluating all of its investments to see what it wants to do with them, Al-Zain said. Among its diverse holdings, it owns 100% of Gulf Air, Bahrain Airport Company, Bahrain International Circuit and a 77% stake in Aluminium Bahrain, as well as stakes in National Bank of Bahrain and Gulf International Bank.

Batelco has a market capitalisation of USD 2.7bn.

Bahrain’s Telecommunications Regulatory Authority (TRA) is making available Batelco’s connections to homes and business to competing operators.

In telecoms terms this is commonly known as unbundling the local loop.

“This move is an essential enabler of further competition at the retail level, especially for the provision of high-speed broadband,” said TRA general director Alan Horne.

“When implemented, it is expected to result in raising the Internet access speed without necessarily raising prices as well as increase product innovation and differentiation.”

To achieve this measure, TRA yesterday issued an invitation to consultancy firms to submit their proposals in order to assist in defining the process and procedures required to effectively complete the local loop unbundling (LLU).

“Along with defining the appropriate approach for implementing LLU, the selected consultancy firm will work on producing the detailed required documents to ensure smooth implementation of service descriptions, service level agreements and operation manuals,” said TRA manager for market and competition Adel Darwish.

“The consultancy firm will closely work with TRA and Batelco to host a series of workshops for the industry, to ensure understanding of the LLU services.”

The Telecommunications Law obliges Batelco to provide other licensed operators an access to its local exchanges, allowing them to reach the end consumer.

This latest move is aimed at supporting a choice of competitive services over Batelco’s access network.

The unbundled local loop services will be available to competing licensed operators as an addition to existing Batelco wholesale services.

The Telecommunications Regulatory Authority (TRA) has issued today for public consultation a draft regulation on Wireless Telecommunications Network Facility Sharing.

The sharing of telecommunications masts and associated facilities should assist in the development of efficient investment in wireless infrastructure, reduce the cost of operating wireless networks that should in turn be passed on to consumers in the form of lower service charges, new services and better quality, and encourage more environmentally friendly practices by minimizing the requirement to construct more towers and masts than is actually required.

TRA’s General Director Mr. Alan Horne said: “TRA wish to send a strong message to all network operators that they must seek to share masts. Such sharing will not only cut operating costs but will contribute to relieving public and environmental concerns over the multiplication of masts and towers”.

This Regulation intends to oblige any Licensee who owns, leases or manages wireless telecommunications network facilities to negotiate and enter into a sharing agreement, upon request of other licensed operators.

TRA’s Telecommunications Access Network Manager Mr. Adel Al-Showaikh said: “We strongly encourage licensed operators to respond to this consultation to ensure the Regulation is practical and minimise issues in its implementation”.

More information regarding the draft regulation can be viewed on TRA’s website (www.tra.org.bh). The Deadline for submitting responses to this consultation document is 4:00 pm on 8 September 2008.

Bahrain’s position as a regional leader in telecommunications was confirmed by the Arab Advisors Group at the 5th Annual Media and Telecoms Convergence Conference.

Using the Total Country Connectivity Measure (TCCM), the Group revealed the groundbreaking progress made by Bahrain which has led to the impressive score of 210.4% connectivity per person - dwarfing the regional average of 135.37%.

Bahrain - which has a reputation for leading ICT in the region - was rated above its fellow GCC states of Saudi Arabia, Qatar, Kuwait and Oman. The Kingdom’s success in connectivity owes much to the recent growth in fixed telephone lines and the internet as well as the traditional source of growth in connectivity, increases in cellular phones. Both reflect the liberalisation policies introduced by the government in 2002 designed to increase competition and choice in the Kingdom’s ICT market.

Since its establishment in 2002 the Telecommunications Regulatory Authority, which follows international best practices, has issued 152 licences as of December 2007, eight of which are national fixed line providers. The Oxford Business Group reported that Bahrain invested more of its GDP in ICT than any other GCC country in 2006. Major multi-national companies including Microsoft, Hewlett Packard and Zain have chosen to establish regional offices in Bahrain.

Shaikh Mohammed bin Essa Al-Khalifa, Chief Executive of the Bahrain Economic Development Board commented:

‘Communication and connectivity lie at the heart of Bahrain’s vision to provide the best environment for business in the GCC. Businesses locating in Bahrain recognise the excellent ICT infrastructure as one of the many advantages that moving to the Kingdom can bring.

Connectivity and wider ICT development are a vital part of the Kingdom’s economic diversification and Bahrain continues its leading role in the region to adopt state-of-the-art technology. Bahrain is fully committed to ensuring a competitive telecommunications industry, and in recent years the Telecommunications Regulatory Authority has made considerable strides in diversifying the industry and improving services.’

The results build on Bahrain’s strong track record in ICT. It was the first Middle Eastern country to install a computer, introduce smartcards and hold an online referendum. Bahrain’s success in ICT is largely due to the Government’s policies designed to foster greater connectivity within Bahrain, by liberalising the telecommunications industry and allowing competition to fuel the rapid expansion of this sector of the economy.

The Total Country Connectivity Measure recognised the ever-increasing number of Bahrainis that are connected via telecommunications or internet access. The Arab Advisors Group measured Bahrain’s connectivity by adding together the household mainline telephone penetration, cellular penetration, and Internet users penetration rates within the country.

People in Bahrain are now among the well-connected population in the GCC, as the country’s connectivity per person has reached 210.4 per cent, dwarfing the regional average of 135.37 per cent, according to the Arab Advisors Group.

The group measured Bahrain’s connectivity by adding together the household mainline telephone penetration, cellular penetration and internet users penetration rates within the country.

“Bahrain’s score of over 200 per cent indicates a well-connected population with a high percentage of citizens enjoying access to more than one mode of communication,” a press statement said.

Shaikh Mohammed Bin Essa Al Khalifa, chief executive of the Bahrain Economic Development Board, said communication and connectivity lie at the heart of Bahrain’s vision to provide the best environment for business in the GCC.

“Businesses locating in Bahrain recognise the excellent ICT (information communications technology) infrastructure as one of the many advantages that moving to the Kingdom can bring,” Al Khalifa said.

Since its establishment in 2002, Bahrain’s Telecommunications Regulatory Authority has issued 152 licences, eight of which are national fixed line providers.

The Oxford Business Group reported that Bahrain invested more of its gross domestic product in ICT than any other GCC country in 2006.

Major multi-national companies including Microsoft, Hewlett Packard and Zain have ALSO chosen to establish regional offices in Bahrain.