Zain Saudi may introduce fiber-internet service after license change

Mobile Telecommunication Co. (Zain Saudi) might plan new services such as fiber-optic internet access in Saudi Arabia after winning an upgrade to its license, Bloomberg reported, citing Andrew White, the firm’s chief strategy and business development officer.

The move would increase the scope of Zain Saudi’s offerings, making it closer to larger Saudi Telecom Co.

Zain Saudi, which was only able to provide mobile services before, had “the most to gain” from the licensing change, White told the news agency.

Saudi Arabia’s third-largest phone operator could start landline voice and data services, after the government said it would upgrade the licenses of telecommunications carriers.

"We are currently studying exactly what it makes sense for us to do," White said.

He added that the company is looking at how it can partner with “existing players” to offer fiber-optic internet access, and that it may work with multiple partners.

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

Zain Saudi, along with Saudi Telecom and Etihad Etisalat Co., is in line to receive a unified telecommunications license and a 15-year extension to its permit following a decision by the kingdom last month. Earlier, only Saudi Telecom was able to provide all services.

“They will have the ability to provide fixed voice services which they weren’t able to provide previously,” White said, about other service providers who also stand to benefit from the unified license. “We simply were not able to offer fixed services at all.”

The license extension will also have significant impact on Zain Saudi’s profit, White added.

The company earlier paid SAR 23 billion ($6.1 billion) for its license, which was scheduled to expire in 2032. Now it will be valid until 2047, which means that the company can amortize the license cost over a longer period, decreasing the expense each year by more than SAR 400 million.

"Clearly the current financial situation of the company is not sustainable," making the license extension necessary, White said.

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

That charge, however, will not apply until the extension begins in 2032, White said.