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Mon 7 Nov 2016 01:19 PM

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Zain Saudi to offer landline, internet data services after license upgrade

The kingdom's third-largest phone operator was currenty provides mobile services only

Zain Saudi to offer landline, internet data services after license upgrade
GCC telecoms

Zain Saud has received an upgrade to its telecom license that allows it to offer landline voice and data services.

The company, the kingdom's third-largest phone operator, has previously been limited to providing mobile services only.

“We are currently studying exactly what it makes sense for us to do,” said company chief strategy and business development officer Andrew White told Bloomberg.

Zain Saudi is getting a so-called unified telecommunications license and a 15-year extension to its permit after a high order by the kingdom in October. The government granted the same terms to other telecommunications companies, including Saudi Telecom and Etihad Etisalat Co.

Previously only Saudi Telecom, majority owned by the government, had been able to provide a full array of services.

White said the company is looking to partner with “existing players” to offer fibre-optic Internet access.

“Zain Saudi may work with multiple partners,” White said. The carrier recently announced an agreement with Saudi Electricity Company that could allow them to jointly use existing infrastructure such as the power company’s ducts into residential properties.

“There’s a great opportunity for us to selectively identify areas where there is a sensible demographic, economic capacity and demand for fibre coverage, and where others haven’t rolled out yet,” White said.

Etihad Etisalat (Mobily) will also benefit from the unified license, the report said.

“They will have the ability to provide fixed voice services which they weren’t able to provide previously,” White said. “We simply were not able to offer fixed services at all.”

The license extension will have a significant impact on the company’s profit.

Zain Saudi, originally paid $6.1 billion (23 billion riyals) for its license, which was scheduled to expire in 2032. It will extended until 2047, meaning it can amortise the license cost over a longer period, decreasing the expense each year by over 400 million riyals.

In exchange for the extension, the companies will pay the government 5 percent of their net income, the Capital Market Authority said last month.

White said the new charge won’t apply until the extension begins in 2032.

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