Zain Saudi to defer paying $1.49bn in government fees

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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 on Monday 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 9.65 riyals, 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 800 million riyals ($213.3m) 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 Al Arabiya on Monday.

He said the 800 million riyals 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 $3bn of loans maturing this month, including a $2.4bn 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 $6.1bn for Saudi Arabia’s third mobile network license, but has struggled to compete with Saudi Telecom Co. (STC) and Etihad Etisalat (Mobily).

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