Zain's 2018 profit in Saudi Arabia breaks record with royalties

The Saudi unit of Kuwait-based telecom operator, Zain Group, has announced a record profit for 2018 thanks to an agreement signed in December between the kingdom's telecom operators and the government, which aims to reduce annual royalties of 5%.

The annual net profit of Zain Saudi has risen to 332 million ryals (against 326 million dirhams) from 12 million ryals a year earlier, said Sunday in a document filed in Tadawul, where its shares are traded. He did not provide the results of the fourth quarter. Analysts surveyed by Bloomberg had anticipated an average loss of 47.4 million riyals over the entire year.

"The financial impact of the application of unified annual fees in the first nine months of 2018 has resulted in a decrease in royalties payable and provisioned for a total of 220 million riyals ($ 59 million)" said Zain Saudi Arabia on Sunday in Tadawul, in a document where his shares are traded. He did not provide the results of the fourth quarter.

The reduction in royalties "should have a positive impact on the financial results of the company in the future," the statement added.

The three Saudi Arabian telecommunications companies signed an agreement with the Ministries of Finance, Telecommunications and Informatics and the Commission for Communication and Information Technology in December, under which the annual fee for commercial services will retroactively go up to 15%, from 15% revenue as of January 1, 2018. The agreement will also resolve outstanding disputes between telecom operators and the government, and establish a new calculation mechanism service and license fees.

The annual turnover reaches 7.53 billion ryals, an increase of 3% compared to the average estimate of 7.35 billion badysts, which is explained by the growing demand for products and services. Zain services.

"Without the reduction of interconnection rates [in the kingdom last year], revenues would have increased 5% for the whole year, "said the company.

There was a total decrease of RGA 404 million in cost of revenue in 2018 mainly due to lower annual fees.

Zain said in its statement Sunday that its own litigation amounts due to CITC would be settled on the condition that the company invest more in the development of its telecommunications infrastructure, among other conditions, over the next three years. The financial impact of this settlement is expected to reach 1.7 billion riyals.

Zain said it has maintained a subscriber base of 8 million in 2018 and that revenue from data has increased 51% over 2017.

"Zain Saudi Arabia has had an incredible year, putting the company in a much stronger fiscal position that will only improve," said Bader Al Kharafi, general manager of Zain Group and vice president. Zain KSA Board of Directors.