Saudi telecoms companies agree new royalty fees and infrastructure investments

Saudi telecoms companies agree new royalty fees and infrastructure investments
Three major Saudi telecoms companies have agreed to change royalty fees to the government.
2 min read
16 December, 2018
Saudi telecoms companies have pledged to improve local infrastructure [Getty]
Three of Saudi Arabia's biggest telecoms companies have reached an agreement on royalty fees to the government, which will see the providers invest heavily in infrastructure in the kingdom.

Etihad Etisalat 7020.SE (Mobily), Saudi Telecom Co 7010.SE, and Zain Saudi Arabia 7030.SE said on Sunday they had reached an agreement with the government to alter royalties they pay.

They will pay 10 percent of annual net revenue from telecommunications services, while Mobily said it will pay an additional one percent. 

Previously the providers were paying 15 percent of net revenues from mobile services, ten percent for fixed line services and eight percent for data services, according to the news agency.

The telecoms companies also reached an agreement on past disputed royalty fees, with most of the companies saying the new system will benefit them.

In return, the providers have agreed to invest more in the kingdom's telecoms infrastructure over the next three years, including in technologies such as 5G.

The move is in-line with the kingdom's Vision 2030, an ambitious project to move Saudi Arabia's economy away from oil and gas.

Telecoms is a key component in this, with a target of 90 percent of homes in densely populated cities having access to high-speed internet and 66 percent in other urban areas.

Vision 2030 is the brain child of Saudi Crown Prince Mohammed bin Salman.

It has already been badly affected by poor economic management and investors staying away from the kingdom following the mass arrest of businessmen and murder of journalist Jamal Khashoggi.

Telecoms and tourism tycoon Richard Branson pulled out of investing in the kingdom following the murder, while others have ended their cooperation on the NEOM technology city.