Madinah, Saudi Arabia — Saudi Arabia has declared that it will not let foreign companies control its telecoms industry.
The kingdom, which is the world’s largest telecoms market, has been struggling with a shrinking market for internet and mobile services.
But this month, Saudi authorities issued a decree barring foreign companies from entering the country to invest.
“It’s a big decision.
It’s a very important one,” said Abdulrahman al-Ghaith, a telecommunications consultant based in Riyadh.
“There are a lot of foreign companies that want to come here, but Saudi Arabia is not going to allow them to do that.”
Saudi Arabia had allowed a handful of foreign telecoms companies to enter in recent years, including China’s Huawei Technologies and Germany’s Siemens AG.
But those companies were mostly run by state-owned companies.
Saudi Arabia, a kingdom of only 4 million people, was the largest telecom market in the world, and the kingdom’s main telecoms operator, the Saudi Mobile Corp., was one of the largest in the Arab world.
Saudi Mobile is owned by the state, but its telecom operators have been in business for decades, so Saudi Arabia decided it needed to protect its telecom business from foreign companies.
The decree, issued Tuesday, says that Saudi Arabia will ban foreign companies to the tune of 100 million dirhams ($2.8 million) a year.
It also says that it may impose fines on those companies that refuse to comply with the new regulations.
The telecoms sector is among the largest companies in the country, and it has a wide range of services and applications.
“The telecoms business is one of Saudi Arabias biggest revenue sources and a key component of the economy,” said Khaled al-Ansari, the managing director of the Dubai-based Middle East Business Research Institute.
“They are one of a number of companies that are able to invest and do business in Saudi Arabia.”
But in recent months, Saudi Telecom has been increasingly struggling.
Saudi Telecom was set up in 1991, with the intention of helping the kingdom become more competitive in a global marketplace.
In 2005, the kingdom was among the first to introduce mobile networks in Saudi, which were later expanded to the rest of the Arab region.
The telecommunications sector was heavily subsidized by the government and the government has been trying to push it out of business.
In 2013, the government created a new Ministry of Communications to oversee telecoms and internet infrastructure, but it has yet to implement the reforms needed to help the sector grow.
In March, the country’s state-run oil company Aramco said it would buy Saudi Telecom for $15.6 billion.
Saudi Aramco owns about 10 percent of Saudi Telecom, which had more than 5 million subscribers.
Aramco’s acquisition of Saudi telecoms company was one reason that the Saudi government announced a national emergency decree in July to ban foreign investment in telecoms, a move that was aimed at controlling foreign firms.
“If the government wants to control its own telecoms infrastructure, they have to make sure that there is an economic balance between the country and its private sector,” said Ali al-Saud, a Saudi-American political scientist.
Saudi Communications Minister Sheikh Saud al-Jubair has said the government will not allow foreign companies into the country as long as they have no economic interests in the kingdom, a view echoed by Saudi Arabia Telecoms CEO Mohammed al-Zahra.
“We have never had any plans to sell Saudi Telecom to foreign entities.
We have no business in any other country,” al-Qasim al-Sheikh, an adviser to Saudi Aramcom, told The Associated Press.
But some Saudi officials are concerned about the impact foreign companies will have on the telecoms sectors.
“Foreign companies, whether they are state-controlled or foreign companies coming here, they’re very much in the public domain,” said Mohammed al-‘Amiri, a telecom consultant in Riyadh, who also works with a group called the Association for Regional Communications.
“Saudi Telecom is the only one that is able to compete with other private telecoms firms.”
Saudi Telecoms has struggled in the past, with prices and service quality problems plaguing the service.
Some of the companies that have tried to enter the telecom sector have struggled to gain traction, with several struggling to gain the public’s trust and market share.
Last year, Saudi Aramcos reported a 25 percent drop in revenues in 2017.
The government has promised to help foreign telecom companies succeed by investing in the sector, but there is also a fear that Saudi Telecom will soon run out of money to invest in the telecom market.
“In the next few years, the situation is going to be dire,” said Zaid al-Nayyan, a professor at Saudi University in Riyadh who has studied Saudi Telecom.
“I don’t think we’ll see a comeback.”