UPDATE 2-Zain Saudi in advanced loan talks as Q3 net loss widens

Tue Oct 16, 2012 12:02pm EDT

* Q3 net loss widens to 493 mln riyals vs 484 mln yr-ago

* Co blames traffic shift away from intl calls for loss

* Says expects to sign loan refinancing deal in Q4

* Shares dip 5 pct after results before recovering (Adds detail on cause of results from new Zain Saudi statement)

RIYADH, Oct 16 (Reuters) - Telecoms operator Zain Saudi said its net loss widened by 2 percent in the third quarter, attributing the deterioration to lower revenue caused by price regulation on international calls.

Saudi Arabia's No.3 mobile company, an affiliate of Kuwait's Zain, made a net loss of 493 million riyals in the three months to Sept. 30, compared with a loss of 484 million in the year-earlier period.

The company - which also said it was in advanced talks to refinance a loan worth 9 billion riyals ($2.4 billion) - said it had suffered from regulations on international call prices.

A price war last year had boosted Zain's market share and international calls had been a growth area in the third quarter of 2011 for the company, which has struggled under mounting losses and multi-billion dollar debts.

The operator's share of the kingdom's mobile subscribers fell 4 percentage points to 12 percent in 2011, according to Zain's annual report, leaving it a distant third to Saudi Telecom Co and Etihad Etisalat (Mobily).

Zain said in its bourse statement its liabilities exceeded its current assets.

"The company believes that it will be successful in meeting its obligations in the normal course of operations and in its efforts to secure the necessary funding," it added.

In September the company extended the maturity of a 9.75 billion riyals facility by two months to allow for refinancing talks to take place, having already received one extension.

It added it repaid 750 million riyals of the facility in August, leaving 9 billion to be addressed.

In Tuesday's statement, Zain Saudi said it was in "very advanced negotiations" with a syndicate of banks to refinance the loan, with signing "most likely" in the fourth quarter.

Parent firm Zain increased its stake in Zain Saudi to 37 percent from 25 percent after underwriting a capital restructuring by its affiliate.

Zain Saudi shares were trading down 3.9 percent at 0820 GMT after dropping as much as 5 percent in early trade.

The group also said it made a quarterly gross profit of 712 million riyals, down from 870 million a year ago. The company's quarterly loss from operations widened by nearly 40 percent to 305 million riyals. ($1 = 3.7501 Saudi riyals) (Reporting by Angus McDowall; Editing by Dinesh Nair and David Holmes)