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Telecommunications industry

Saudi Arabia Selects AT&T to Modernize its Telecommunications System

Strategic Insights

— 1 min read

The Saudi Arabian government, after extensive lobbying by top officials of the Clinton Administration, has chosen AT&T Corporation to modernize its entire telecommunications system. This decision marks a significant victory for American companies in winning big contracts from foreign governments. The deal is valued at $4 billion over the next six years and will involve the installation of fiber optics, advanced switching systems, and a nationwide cellular telephone system. AT&T will have to negotiate a formal contract for the precise terms, but the decision virtually assures the company of securing the business.

Key Takeaways:

  • The Saudi government has selected AT&T to modernize its entire telecommunications system, a deal valued at $4 billion over the next six years.
  • The decision was made after heavy lobbying by top officials of the Clinton Administration, including President Clinton, Commerce Secretary Ronald H. Brown, and Secretary of State Warren Christopher.
  • The contract will involve the installation of fiber optics, advanced switching systems, and a nationwide cellular telephone system, which will be completed by the year 2000.
  • AT&T will build a digital phone network with 1.5 million lines and supply the extensive switching equipment, network management systems, and training projects required for the network.
  • Alcatel S.A. of France, Siemens A.G. of Germany, Northern Telecom of Canada, and an alliance between Ericsson of Sweden and the NEC Corporation of Japan were among the losers in the bid process.
  • Each of the losing companies submitted detailed proposals last September and had been supported by their respective governments.

Statistics:

  • The Saudi telecommunications system will be modernized over the next six years, with the entire project scheduled to be completed by the year 2000.
  • AT&T will build a digital phone network with 1.5 million lines.
  • The cellular telephone system will be capable of serving 200,000 customers across the country.
  • The deal is valued at $4 billion, which is larger than the $6 billion contract awarded to Boeing and McDonnell Douglas two months ago.
  • The U.S. Export-Import Bank offered financial assistance for the project, but the Saudi Government has not taken up the offer.

Sources:

  • Saudi Ministry of Posts and Telecommunications
  • AT&T Corporation
  • The New York Times
  • The Washington Post

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