New CITC law to cut into telecom company profits [Arab News (Saudi Arabia)]
(Arab News (Saudi Arabia) Via Acquire Media NewsEdge) Experts say that telecom companies could lose up to 20 percent of their profits because of the recent requirement by the Communication and Information Technology Commission (CITC) to link prepaid services with customer ID numbers.
The decision, which was originally enforced for security and privacy reasons, now affected those who could not renew their iqamas because of the Nitaqat program.
The CITC's new regulations now will cost the telecom companies a significant number of expatriate costumers given the fact that more than 8 million expatriates are working in Saudi Arabia. It is unknown how many of them are affected by the Nitaqat program but the criticism it received since it began indicates the significance of the number.
Many companies categorized "red" in the Nitaqat structure are struggling with renewing their employees' iqamas because of a failure to employ the minimum percentage of Saudi workers.
Farooq Al-Khateeb, an economic analyst, said that telecom companies will face a 20 percent decrease in their profits because of the CITC's decision.
"A lot of expatriates working in "red" companies can now no longer recharge their prepaid SIM cards because of this decision," said Al-Khateeb.
He said the result of this negative decision will show next year in the first quarter reports of these companies. "Thirty-six percent of telecom company consumers are expatriates who use prepaid services," said Al-Khateeb.
Meanwhile, CITC announced that it is going to ban a cell-phone application spread that allows users to recharge their SIM cards without the need to provide the ID numbers. It considered the application a violation of the regulations.
"CITC is aware of the use of such applications and our technical team is working on closing all the security gaps," said Sultan Al-Malik, spokesman of CITC.
He added that the purpose of the commission's recent regulation was to organize the telecom market after plenty of SIM cards of unknown owners were recently activated.
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