Mobile Telecommunications KSCP : Telecommunication Company Saudi Arabia (Zain) announces the expected impact of the High Order to extend the Companys License by 15 additional years

Mobile Telecommunication Company Saudi Arabia (Zain) announces the expected impact of the High Order to extend the Companys License by 15 additional years

Image caption : Zain KSA Logo

Saudi Arabia: 3 October, 2016

Based on the High Order dated 30/12/1437 H corresponding to 01/10/2016 G which was announced by the Capital Market Authority on 01/01/1438 H corresponding to 02/10/2016 G directing the Communications and Information Technology Commission (CITC) to coordinate with Mobile Telecommunication Company Saudi Arabia (Zain) to extend its license for an additional 15-year period, during the period of the extension the government will be entitled to a 5% of the Companys annual net income, in addition, to coordinate with Zain to facilitate the issuance of a Unified Telecommunication License that allows the Company to provide all telecommunication services. The High Order also requires that the Company coordinates with the Ministry of Finance to discuss alternatives regarding the amounts due to the government.
The Company announces that this High Order will have the following positive impacts on the company:

1) In regards to the license extension for an additional 15 years, bringing the remaining period to 32 years ending on 21/03/1469 H corresponding to 18/01/2047 G:
Reducing the annual amortization charge by 433 million Saudi Riyals each year starting from the date of the extension, this will reduce the Companys net losses by the same amount.

2) In regards to granting the Company a Unified License to provide all telecommunication services:
The Unified License enables the Company to offer all telecommunication services, including fixed services. The Company expects that this will have a positive impact on the Companys financial performance, however the exact impact cannot be determined at this time.

3) In regards to the coordination with the Ministry of Finance to discuss the alternatives regarding the amounts due to the government:
The Company will announce the financial impacts of any agreements reached with the Ministry of Finance following their approval.