Saudi government offers extended, unified licences to telecoms firms

The move is expected to shake up the fixed services market dominated by Saudi Telecom



The Saudi government has allowed telecoms firms Saudi Telecom Company, Etihad Etisalat (Mobily) and Zain to extend their licences by up to 15 years and offered all three the ability to provide fixed, mobile and internet services.

Zain Saudi Arabia’s licence, originally granted in March 2008, will now expire in January 2047 following the decision, the company confirmed.

Other operators are expected to be granted similar 15-year extensions.

The government will be entitled to 5 per cent of each company’s annual net income during the extension period.

Zain also confirmed that it had been awarded a unified licence, allowing it the ability to provide mobile, landline and broadband internet services.

The company said other Saudi telecoms firms would be allowed to obtain the same licence, which had previously been only provided to Saudi Telecom Company.

Bader Al-Kharafi, Zain Group vice chairman, praised the decision.

“The unified license will now enable fair competition in the mobile and fixed telecommunications services as it will allow operators to deploy fit-for-purpose and efficient technologies to meet market demand,” he said.

“The wisdom of the CITC’s decision in unifying this license is strong indication that it wishes to further develop the telecommunications sector, particularly in the fixed space for the benefit of the kingdom.”

The potential entrance of new competition in the fixed market is expected to be to the detriment of STC, which is estimated to hold more than 90 per cent market share in the space.

The Capital Markets Authority said the shares of listed telecoms operators would be suspended following the decision.

They will begin trading again once the companies announce the impact of the new measures on their operations.

In recent years the Saudi telecoms regulator has sought to increase competition in what is the Gulf Cooperation Council’s largest market. At the end of 2014 it allowed the introduction of two MVNOs in the country and last year it reduced call connections fees.

Read: Saudi Telecoms Regulator Cuts Call Connection Fees By 40%