Telecom operator Zain Saudi's first-quarter loss narrowed by more than expected as demand for the company's products and services rose.

Zain Saudi has yet to make a quarterly profit since launching services in 2008 and has battled to compete against better-resourced rivals Saudi Telecom Company (STC) and Etihad Etisalat (Mobily).

Zain Saudi, 37-per cent owned by Kuwait's Zain, made a net loss of 257 million riyals ($68.6 million) in the three months to March 31, down from a net loss of 318 million riyals in the same period a year earlier.

Two analysts surveyed by Reuters forecast respectively that Zain Saudi would post a quarterly net loss of 270.1 million riyals and 289.4 million riyals.

Revenues for the quarter rose 9 percent from a year earlier to 1.68 billion riyals thanks to rising demand for its products and services, the company said.

The number of Zain Saudi subscribers at the end of March was 10.6 million, up 24 percent from the same point of 2014.

In the longer term, Zain Saudi should benefit from the telecom regulator's February decision to slash termination fees.

These fees are charged when a call originating on one network terminates on another, with the caller network charged by the operator of the network on which the call is received.

As such, these fees benefit the larger operators as they have a larger proportion of calls within their own networks. Zain Saudi had long called for Saudi's termination costs, which were among the highest in the region, to be cut.

Shares in Zain Saudi closed 1.2 percent lower on Tuesday, ahead of the publication of the quarterly results.-Reuters