Saudi telecom operators accept annual royalties

DUBAI (Reuters) – Telecommunications Operators Saudi Telecom Co (7010.SE) (STC), Etihad Etisalat (7020.SE) (Mobily) and Zain Saudi Arabia (7030.SE) said Sunday have agreed with the government of a change in the calculation of their annual royalties.

The companies also announced that they have reached an agreement with the government to pay litigious fees to pay for previous years until 2017. In return, the trio decided to invest in upgrading its network infrastructure over the next three years.

The Kingdom has set specific goals to strengthen high-speed broadband Internet connectivity as part of its Vision 2030 plan to modernize the economy, including more than 90% of the housing area in densely populated cities. and 66% in other urban areas.

The operators stated that this agreement would imply an annual fee of 10% of the net telecommunication services turnover as of January 1, 2018. Mobily added that it would also pay an annual fee corresponding to 1 % of its net telecommunications revenues.

STC stated that the recalculation had been compared to the previous royalty of 15% of mobile net revenues, 10% of fixed telephony net revenues and 8% of net data services revenues.

STC said the change would have a positive impact on its financial results in the fourth quarter of 2018, while Zain Saudi said it would result in a 220 million riyal ($ 58.7 million) decrease in its payments for the period from January 1st to September 30th.

Mobily said that from 2019, the impact would represent an additional cost estimated between 450 and 600 million riyals per year over the next few years.

Zain Saudi Arabia said the expected financial impact of the settlement of its controversial annual royalties for the period 2009-2017 is expected to reach 1.7 billion riyals.

Mobily said his agreement to invest over the next three years would allow him to boost the quality of its fixed and mobile networks and invest in the deployment of new technologies such as 5G.