Riyadh – Mubasher: Mobile Telecommunications Company Saudi Arabia (Zain) on Sunday announced it has signed an agreement with the Ministry of Finance (MOF), the Ministry of Communications and Information Technology (MCIT), and Communications and Information Technology Commission (CITC).

Upon the agreement, they agreed to consolidate the annual royalty fee and reduce it to 10% from 15% of net revenues as of 1 January 2018, Zain said in a statement to the Saudi Stock Exchange (Tadawul).

Moreover, the agreement includes the settlement of the disputed amounts between Zain and CITC regarding the payment of disputed annual royalty fee for the period from 2009 to 2017, the Saudi telecom firm company added.

Accordingly, Zain has to further invest in expanding its infrastructure in accordance with the terms and conditions of the agreement over the coming three years.

Zain projected that the financial impact of applying the unified annual royalty fees from 1 January 2018 to 30 September 2018 will fall to SAR 220 million, which will be consequently reflected in the next financial results.

“The company also anticipates positive future financial impact from the reduction in annual royalty fees, which will be reflected in the company's future financial results,” according to the filing.

Additionally, Zain expected the financial impact from the settlement of the disputed annual royalty fees for the period from 2009 to 2017 to reach SAR 1.7 billion over the next three years through implementing the terms and conditions of the settlement agreement with the CITC for investment in infrastructure.

In October, Saudi Zain posted a net profit of SAR 48 million for the third quarter of 2018, up from SAR 3 million in Q3-17.

During the first nine months of 2018, the company turned to loss after incurring SAR 67 million, against a profit of SAR 57 million in the year-ago period.