Zain Saudi, the telecommunications operator, has just received approval from the UAE government to defer payment of its due license fees that amounted to US$1.49 billion over the next seven years. The company is currently deeply indebted and the news pushed its share values to an eight month high.
The payment due that had been rescheduled would be considered as a commercial loan. The first payment on the loan would fall due on 2021 according to the telecommunications firm.
The shares in Zain Saudi jumped by 9.7% to 9.65 riyals at early morning trading. This was the highest level attained since October 2012. The company though has about US$3 billion worth of loans maturing by the end of this June.
Zain Saudi also has cornered 15% of the mobile subscribers in Saudi Arabia as of 2012's end. The agreement to defer payments was entered into with the Saudi Arabian Ministry of Finance. The annual license fees is worth SAR800 million or US$213.3 million staggered for the next seven years. The figures were confirmed with the regulatory documentation submitted by the company.
The company had agreed to purchase US$6.1 billion for the third mobile network license in Saudi Arabia. The license has a term of 25 years. Unfortunately, Zain Saudi has been unable to compete with the two major firms in the country, namely Saudi Telecom Co and Etihad Etisalat.
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