Zain to defer $ 1.49 bn in government fees

JEDDAH: Indebted telecom operator Zain Saudi has received government approval to defer payment of license-related fees that could total around $ 1.49 billion over seven years, sending its shares yesterday to an eight-month high.
The rescheduled payment will be treated as a commercial loan, with the first payment due in 2021, the company said.
Shares in Zain Saudi rose 9.7 percent to SR 9.65, their highest close since October 2012.
The firm, which had a 15 percent share of Saudi’s mobile subscribers as of the end of 2012, reached an agreement with Saudi’s Ministry of Finance to reschedule annual fees of SR 800 million ($ 213.3 million) for the coming seven years, the company said in a bourse statement late on Sunday.
The government takes 16 percent of Zain Saudi's gross revenue in fees, minus call interconnection costs, company Chairman Fahd Bin Ibrahim Al-Dughaither said in an interview with Saudi-owned broadcaster Al Arabiya yesterday.
He said the SR 800 million was calculated as an average of what the company is estimated to be earning at present and the expected increase in revenues over the deferment period.
Zain Saudi will use the money to pay down debt and developing the company's operations, Al-Dughaither said. It has $ 3 billion of loans maturing this month, including a $ 2.4 billion Islamic facility.
He said that Zain was finalizing a deal with lenders to renew the Islamic loan for five years on the company's own terms.
The firm, 37-percent owned by Kuwait’s Zain, has yet to make a quarterly net profit since launching operations in 2008.
Zain Saudi paid $ 6.1 billion for Saudi Arabia’s third mobile network license, but has struggled to compete with Saudi Telecom Co. (STC) and Etihad Etisalat (Mobily).