Riyadh – Mubasher: Saudi Telecom Company (STC) on Sunday announced it has signed an agreement on with the Ministry of Finance (MOF), the Ministry of Communications and Information Technology (MCIT), and Communications and Information Technology Commission (CITC).
The agreement has been signed for a comprehensive and final settlement of the remaining dispute regarding commercial services provisioning fees provided by STC and the licenses fees granted to it for the period from January 2008 to 31 December 2017, STC said in a statement to the Saudi Stock Exchange (Tadawul).
Accordingly, STC shall invest in its infrastructure over the coming three years in accordance with the terms and conditions of the agreement, according to the statement.
Moreover, the agreement includes detailed mechanism specifying targeted performance indicators, the company indicated.
This agreement will also contribute to the development of STC’s network infrastructure, in line with the company's strategy to reach the best performance of its network coverage and speed, the statement added.
The financial impact resulted from signing the agreement and settling the existing dispute is expected to be positive, the Saudi telecom firm said.
“The company will use provisions already allocated in its financial statements over the past few years to meet large part of the capital investments planned under the agreement, however, the current positive financial impact cannot be measured reliably because it depends on the implementation of the agreement over the three years period and the expected revenues from such investments,” it highlighted.
The mechanism for calculating the commercial services provisioning fees as of 1 January 2018 was also amended under the agreement, the company pointed out.
“The fees will be 10% of net revenues from the telecommunications services provided by STC instead of the current calculation mechanism,” it noted.
The company also said that the financial impact on amending the mechanism for calculating the provisioning fees during 2018 and taking into account the provisions allocated to it during the year is expected to positively impact STC’s financial results during the fourth quarter.
STC said that it will use part of the provisions to cover the differences resulted from the modified mechanism, while the remaining part of around SAR 500 million will be reversed, as it is not needed.
It is worth noting that STC previously reported a net profit of SAR 2.64 billion during Q3-18, compared to SAR 2.56 billion in Q3-17.
