Etihad Atheeb Telecommunications Company said it started on Saturday high speed internet in Saudi Arabia's two largest cities, officially ending Saudi Telecom's (STC) monopoly on fixed-line phone services.

The firm would start operations in the Saudi capital Riyadh and the Red Sea port city of Jeddah, it said in a statement posted on the bourse's website, but did not say when it would begin voice services.

Atheeb is expected to face tough competition from STC and two other firms that won licences last year to offer fixed-line services.

The two other firms are Optical Communications Company, led by US Verizon Communications and Al-Mutakamilah Company, which is led by Hong Kong's PCCW.

Etihad Atheeb has said it plans to invest $1 billion over five years in its fixed-line operation and wants to target government and industrial hubs as well as regions covered insufficiently by STC.

Earlier this year, Atheeb raised 300 million riyals ($80 million) by selling 30 per cent of its share capital in an initial public offering that was almost 2.5 times oversubscribed.

The IPO was Saudi Arabia's first since August after bourse regulators froze fresh listings after the global financial crisis hit local and global markets.-Reuters