Zain Saudi plans to complete tower sale talks in 2017: CEO

Mobile Telecommunication Co. Saudi Arabia (Zain Saudi) is still in talks over the sale of its transmitter towers, but aims to complete commercial negotiations and obtain regulatory approval by year-end, CEO Peter Kaliaropoulos told Argaam.

Zain Saudi reported a net profit of SAR 45 million in the first quarter, its first ever, compared to a loss of SAR 45 million in Q1 2016.

The telco was awarded a unified telecommunication license by the Communications and Information Technology Commission (CITC), the Saudi telecom regulator, in February this year – a move expected to positively contribute to net profit going forward, Kaliaropoulos said.

Q. Zain recorded its first ever quarterly net profit in Q1 2017. How did you achieve this?

A. [The] results were the outcome of a combination of factors including sales activity, customer care, network quality and operational efficiencies across the business.

We focused on increasing the share of wallet from our customer base, reducing churn and implementing disciplined operational efficiencies to reduce expenditure. Such initiatives resulted in revenue growing by 7 percent and EBITDA by 36 percent, compared to Q4 2016.

Q. What financial impact do you expect from the unified telecom license?

A. The unified license allows Zain to amortize the cost of the original license for another 15 years. Although this is not a cash benefit to Zain, such accounting change contributes positively to Zain’s net profit.

Critically important is the fact that this license now allows Zain to provide all telecommunications products and services, including fixed and wireless to consumer, business and government sectors. We are studying the provision of innovative products and offers to complement our pre and postpaid mobility offers and ultimately grow our customer base and revenues.

Q. Are you looking to roll out any new services under the upgraded license?

A. The unified license allows us to explore the introduction of smart solutions to the market, which combine our 4G/LTE-A mobile network with fiber technology to customer premises commonly known as FTTX and eventually deliver services via cloud networking.

Our strategy is focused on leveraging our core capabilities of our mobile network and complementing with FTTX to deliver high speed broadband services to major cities and rural and remote locations.

Q. Are there any updates regarding the sale of your transmitter towers in the kingdom?

A. We continue to explore the opportunity to monetize towers in a way that increases shareholder value and does not disrupt operational capability.

Negotiations are ongoing and should a commercial agreement be reached, the deal is subject to approval by government authorities. Our goal is to conclude commercial negotiations and seek all approvals from authorities in 2017.

Q. Can you give us further details about the project to boost broadband coverage in untapped areas?

A. Zain was awarded the MBB project to deliver high speed, 10Mbps broadband services to 140,000 customers in 13 provinces around the kingdom.

Funding for the project is a joint effort between CITC and Zain as a Universal Service Fund (USF) program is in existence by the government to assist all unified licensed operators to rollout high speed internet access services to remote communities.

Based on competitive bidding, the USF program partially contributes to Zain’s capital expenditure for these remote communities. Without such support, all companies find it very challenging to expand their network as breakeven from such investments is difficult to achieve.

Q. What is the outlook for the Saudi telecom sector in 2017? Is the industry seeing the impact of austerity measures in the country?

A. We expect the market to face more significant challenges in 2017, especially since the market contracted by 4.9 million subscribers in 2016. But the telecommunication sector is essential in the digital transformation of the country, a main objective of the National Transformation Program 2020 and Vision 2030. With all this in mind, we believe that the market will witness more infrastructure investments and growth in the long term. 

Write to Jerusha Sequeira at jerusha.s@argaamnews.com