Pursuant to Section 11.03 of the Ministry of Investment Services Manual, foreign ownership in the telecommunications sector is generally permitted, subject to specific restrictions depending on the nature of the activity. For telecommunications services, foreign ownership is limited to a maximum of 60%, whereas for value-added communications services, the cap is set at 70%.

The Saudi telecommunications market is dominated by three operators holding unified licences: Saudi Telecom Company (STC), Etihad Etisalat Company (Mobily) and Mobile Telecommunication Company Saudi Arabia (Zain KSA). It is reported that the State holds 62% of STC’s shares through the Public Investment Fund (PIF), a further 6.9% through the General Organization for Social Insurance (GOSI), and 4.9% of Zain KSA’s shares through GOSI. Although Saudi Arabia has reportedly pursued a limited privatisation programme for state-owned enterprises and assets since 2002, open to both domestic and foreign investors, this has so far resulted only in the partial privatisation of state-owned operators in the telecommunications sector.

According to Saudi Arabia's Accounting Separation Regulatory Framework, accounting separation is applied and required by law for operators with significant market power. However, functional separation for operators with significant market power is not required by law.

According to Art. 6 of the Implementing Regulations of the Telecommunication Act, the Communications, Space and Technology Commission (CST) Board of Directors may decide to cap the number of licences, registrations or permits in a given telecom/ICT market.

Under Art. 6 of the Rules for Foreign Investment in Securities, Saudi Arabia applies specific maximum foreign equity share limits to listed companies. A non-resident foreign investor (other than a foreign strategic investor) may not own 10% or more of the shares or convertible debt instruments of any listed issuer. In addition, the aggregate holdings of all foreign investors (resident and non-resident, excluding foreign strategic investors) in any single listed issuer may not exceed 49% of its shares or convertible debt instruments, subject also to stricter limits that may be set in the company’s articles of association or other applicable regulations.

According to Section 5.1.2 of the Regulations of Localization Obligations for Telecommunications Service Providers, operators holding licences or permits such as the Unified Facility-Based Telecommunications Services Licence, Facilities-Based Fixed Telecommunications Services Licence, Mobile Virtual Network Operator (MVNO) Licence, Internet of Things Virtual Network Operator (IoT-VNO) Services Licence, and the Licence to Provide Wholesale Services for Infrastructure must comply with specified Saudization (localisation) requirements for leadership and general staff positions.
These providers must ensure that the Chief Executive Officer is a Saudi national, that Senior Management (Level I) positions are localised at a rate of at least 75%, that Senior Management (Level II) positions are localised at a rate of at least 80%, and that an overall localisation rate of no less than 80% is achieved across all employees in the company.

According to Art. 7 of the Investment Law of 2024, the Ministry of Investment is required to establish a national register of investors and to receive investors’ applications for the legal approvals necessary to engage in investment activities, including the issuance of any licences or permits. Under Art. 8, the competent authority must issue and update a list of excluded (negative list) activities, which the Ministry must publish, and any foreign investor wishing to engage in an activity included in this list must first obtain prior approval from the Ministry of Investment. It is reported that the negative list covers, inter alia, audiovisual and media services, electronic mail services, the provision of online information and database retrieval services, as well as several telecommunications services.

Foreign investors must comply with Saudi Arabia’s Saudization policy, implemented through the Nitaqat programme, which aims to increase the proportion of Saudi nationals (including women) employed in the private sector. The programme requires companies to employ a minimum percentage of Saudi citizens, with quotas that vary by sector, company size, and occupation and are periodically revised by the Ministry of Human Resources and Social Development. Under current practice, foreign investors are expected to submit an investment and Saudization plan when applying for registration or an investment licence with the Ministry of Investment (MISA), indicating their projected Saudization levels over time; this plan is taken into account when assessing the investment project.

According to Art. 8(4) of the Implementing Regulations of the Law of Patents, Layout-Designs of Integrated Circuits, Plant Varieties, and Industrial Designs, any patent applicant residing outside the Kingdom must appoint an authorised agent within Saudi Arabia.

Saudi Arabia is a party to the Patent Cooperation Treaty (PCT).

Saudi Arabia has a copyright regime under the Royal Decree No. M/41 on Copyright Law. However, the exceptions do not follow the fair use or fair dealing model, therefore limiting the lawful use of copyrighted work by others. Art. 15 lists the exceptions, which include copying the work for personal use, quoting passages from the work in another work, and using the work by way of clarification for educational purposes, among others.

According to Art. 9 of the Government Tenders and Procurement Law, priority in public procurement must be given to local small and medium-sized enterprises (SMEs), local content and companies listed on the Capital Market. Art. 30 further provides that local SMEs should be prioritised where the value of government purchases does not exceed SAR 500,000 (approx. USD 130,000).
In addition, the Regulation on Preference for Local Content, Local SMEs, and Publicly Listed Companies establishes price preferences in government tenders. Under Art. 4 of the Regulation, government entities must grant a 10% bidding price advantage to local SMEs in which Saudi nationals hold more than 50% ownership, and a 5% price advantage to publicly listed companies.

According to Art. 10 of the Regulations on Preference for Local Content and Local SMEs and Companies Listed on the Capital Market in Business and Procurement Transactions, government agencies must apply the National Product Price Preference Mechanism to all contracts in respect of national products that are not included in the mandatory list. Under this mechanism, a national product is granted a price preference by deeming, for evaluation purposes, that the price of the foreign competing product is 10% higher than the price indicated in its bid.

Under the Cloud Computing Services Provisioning Regulations, government entities are permitted to host their data only with cloud service providers (CSPs) that hold the appropriate licences or registrations issued by the Communications, Space & Technology Commission of Saudi Arabia (CST). Section 3.3.7 mandates that subscribers whose data is classified as data of Saudi government agencies must utilise CSPs registered with the CST.
These Regulations represent the fourth iteration of this legislative framework. Since the introduction of the initial version, the legislation has included progressively stringent provisions. Notably, Section 3.3.9 prohibited the transferring, storing, or processing only of Level 3 data unless the provider was registered with local authorities. Level 3 data encompasses, among other categories, sensitive information managed by public authorities.

The Regulatory Arrangements for the Local Content and Government Procurement Law mandates the Local Content and Government Procurement Authority (LCGPA) to set local content requirements for individual contracts, track the amount of local content used by contractors, and obtain and audit commitments by contractors to increase their reliance on local content in the public procurement. The Law defines local content as “total spending in Saudi Arabia from the participation of Saudi elements in the workforce, goods, services, assets, technology, etc.” The Law requires the bidder in public procurement to include a list of items provided locally in their proposal, and this list of items will vary for each bidding. The bidder should meet a minimum baseline of local content provided by LCGPA in order to participate. LCGPA also manages an online portal through which contractors register their commitments to increase local content. Contractors who fall short of their commitments will be fined and could be blacklisted from procurement for repeated failures to honour commitments over the long term.