Virgin Mobile Middle East and Africa (VMMEA), part-owned by British entrepreneur Richard Branson's Virgin Group, launched telecoms services in Saudi Arabia on Tuesday, beginning the biggest shake-up in the kingdom's telecoms sector in six years.

VMMEA is launching two brands after benefiting from the national telecoms regulator's decision to order the country's three mobile operators to each host a mobile virtual network operator (MVNO) in an effort to stimulate competition.

The two brands being launched by VMMEA are Virgin Mobile, aimed at the youth market, and Friendi Mobile, targeting Saudi's expatriate workers.

As well as VMMEA's tie-up with STC, Jawraa Lebara partnered with No 2 operator Mobily. Dubai retailer Axiom Telecom did likewise with Zain Saudi, but the regulator subsequently ordered that licence to be retendered in a process still ongoing.

VMMEA and Jawraa last week acknowledged that problems arranging interconnection with other operators and satisfying state security concerns had delayed their launch, but the regulator has now given VMMEA the go ahead, according to a company statement on Tuesday.

The launch, days before the annual haj pilgrimage, is timely. An estimated 1.4 million Muslim pilgrims are expected to arrive in the kingdom this year.

Such an influx is a boon for telecoms operators, with tourists often buying local sim cards to call locally and to friends and family at home.

VMMEA is aiming to tap into Saudi Arabia's large and relatively young population. Its economy is forecast to grow 4.2 per cent this year, according to a Reuters poll of economists this month, while the CIA Factbook estimates that 47 per cent of its 27.3 million people are under 25.

The introduction of MVNOs is the biggest change to Saudi's telecoms sector since Zain Saudi became its third mobile operator in 2008. The kingdom is only the second Gulf country after Oman to allow MVNOs, which are widespread in Europe, North America and Asia.

VMMEA, which also has operations in Oman, Jordan, South Africa and Malaysia, predicts that Saudi's introduction of MVNOs could spur neighbouring countries to do likewise.

"The regional telecommunications industry is set to be reshaped over the coming years," it said.  - Reuters