DUBAI: Telecommunications operators Saudi Telecom Co., Etihad Etisalat (Mobily) and Zain Saudi Arabia said on Sunday that they had agreed with the government to a change in the calculation of their annual royalty fees.
The companies also said they had reached a deal with the government to settle disputed fees to be paid for previous years up to 2017. In return, the trio agreed to invest in upgrading their network infrastructure over the next three years.
The Kingdom has set specific goals to boost high-speed broadband Internet connectivity as part of its Vision 2030 plan to modernize the economy, including exceeding 90 percent of housing coverage in densely populated cities and 66 percent in other urban areas.
The operators said the agreement will involve an annual royalty of 10 percent of net revenue from telecommunications services starting from Jan. 1, 2018. Mobily said in addition it would also pay an annual license royalty equal to 1 percent of its annual net telecommunication revenues.
STC said the new calculation was compared to the previous fee of 15 percent of net revenues from mobile services, 10 percent of net revenues from fixed line services and 8 percent of net revenues from data services.
STC said the change would have a positive impact on its financial results during the fourth quarter of 2018, while Zain Saudi said it would mean a drop in its payment for the period Jan. 1 to Sept. 30 by SR220 million ($58.7 million).
Mobily said that starting from 2019 onwards, the impact represents an additional cost estimated to be in the range of SR450 to SR600 million per year over the next few years.
Zain Saudi Arabia said the expected financial impact from the settlement of its disputed annual royalty fees for the period 2009 to 2017 is expected to reach SR1.7 billion.
Mobily said its agreement to invest over the next three years would enable it to boost the quality of its fixed and mobile networks and to invest in the deployment of new technologies such as 5G.
Saudi Telecom Co. agrees royalty fees
Saudi Telecom Co. agrees royalty fees
Closing Bell: Saudi main index closes in red at 11,167
RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Wednesday, losing 46.43 points, or 0.41 percent, to close at 11,167.54.
The total trading turnover of the benchmark index was SR4.88 billion ($1.30 billion), as 66 of the listed stocks advanced, while 192 retreated.
The MSCI Tadawul Index decreased, down 5.52 points, or 0.37 percent, to close at 1,506.55.
The Kingdom’s parallel market Nomu lost 153.40 points, or 0.65 percent, to close at 23,486.52. This comes as 32 of the listed stocks advanced, while 31 retreated.
The best-performing stock was Tourism Enterprise Co., with its share price surging 9.95 percent to SR14.36.
Other top performers included Mobile Telecommunication Co., Saudi Arabia, which saw its share price rise by 5.32 percent to SR11.48, and Al Masar Al Shamil Education Co., which saw a 4.86 percent increase to SR22.89.
On the downside, Almoosa Health Co. was the day’s weakest performer, with its share price falling 4.81 percent to SR150.40.
Dallah Healthcare Co. fell 3.81 percent to SR113.50, while Saudi Research and Media Group dropped 3.44 percent to SR100.90.
On the corporate front, Arabian Plastic Industrial Co. has signed a non-binding memorandum of understanding with K. K. Nag to explore the establishment of a specialized manufacturing facility for expanded polypropylene products.
According to a Tadawul statement, the agreement sets out initial mutual obligations and rights between the two parties as part of APICO’s broader expansion strategy to increase production capacity and meet rising industrial demand.
The company’s share price rose 1.21 percent to SR43.52 on the parallel market.
