Saudi Telecom Co. agrees royalty fees

Shares in the Saudi Telecom Co. rose following news of an agreement on royalty fees paid to the government. (Reuters)
Updated 17 December 2018
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Saudi Telecom Co. agrees royalty fees

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.


Paris Air Show: After Boeing showstopper, Airbus seeks order bounce

Updated 19 June 2019
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Paris Air Show: After Boeing showstopper, Airbus seeks order bounce

  • British Airways owner IAG signs letter of intent to buy 200 of its 737 MAX jets
  • Airbus is looking for up to 200 orders for the A321XLR, which is designed to open up new routes

PARIS: Airbus, reeling from the potential loss of a major customer for its best-selling A320neo as British Airways owner IAG placed a lifeline order for the grounded 737 MAX, prepared to hit back with more orders for its A321XLR on Wednesday.
The planemaker has been negotiating with US airlines investor Bill Franke whose Indigo Partners has also been known to place orders for multiple airlines within its portfolio and could reel it in for the Paris Air Show, industry sources said.
Airbus declined to comment.
After weathering intense scrutiny over safety and its public image, Boeing won a vote of confidence on Tuesday as IAG signed a letter of intent to buy 200 of its 737 MAX jets that have been grounded since March after two deadly crashes.
The surprise order lifted the energy of a previously subdued Paris Airshow, where the talk had been of the possible end of the aerospace cycle, given the issues at both Boeing and Airbus as well as geopolitical and trade tensions around the world.
Australia’s Qantas Airways said on Tuesday it would order 10 Airbus new A321XLR jets and convert a further 26 from existing orders already on the Airbus books.
Airbus is also in talks with leasing company GECAS and has been trying to secure an eye-catching order for the A321XLR from American Airlines, though the world’s largest carrier does not typically make announcements at air shows.
Airbus is looking for up to 200 orders for the A321XLR, which is designed to open up new routes.