RIYADH - Saudi mobile telephone firm Etihad Etisalat 7020.SE said on Tuesday it had awarded Samsung Electronics (005930.KS) a $100 million deal to expand the WiMax network of its subsidiary Bayanat al-Oula.

The network would be the biggest of its kind in the Middle East both in terms of geographic coverage and user capacity, said Salim Saasouh, Samsung's Middle East and North Africa regional manager for telecoms and network business.

WiMax is a telecommunication technology that provides wireless transmission of data using a variety of transmission modes, from point-to-multipoint links to portable and fully mobile internet access.

Mobily, which bought Bayanat in 2007 for 1.5 billion riyals, would finance the expansion through a syndicated loan, its chief executive, Khaled al-Kaf, said.

The deal would expand Bayanat al-Oula's high-speed broadband service to 20 cities from the four previously covered by the firm.

Mobily stock closed down 2 percent, however, tracking the telecoms and information tehcnology index. The Saudi all-share index .TASI ended up 0.06 percent.

Bayanat's existing WiMax network serves 30,000 subscribers. With this expansion, we will be able to increase Bayant's WiMax capacity by at least three times, Kaf told Reuters.

Samsung will deliver 1,400 stations to increase Bayant's overall number of WiMax stations to 1,800, he said. Samsung will deliver the network before the end of 2009.

Mobily, which already provides mobile broadband services, hopes the deal would widen the base of its broadband clients.

WiMax' potential is huge. Right now, its reach is like mobile phones were in the 1990s, said Kaf, whose firm has 630,000 mobile broadband users. Kaf said this makes his firm a market leader in Saudi Arabia.

Mobily competes with Saudi Telecom Co 7010.SE (STC), the largest Arab telecom firm by market value, and Zain Saudi Arabia 7030.SE for mobile telephone users in the kingdom, the world's largest oil exporter where mobile telephone penetration exceeds 100 percent. ($1=3.750 Saudi Arabian Riyal) (Reporting by Souhail Karam; editing by Simon Jessop)

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