* Q1 loss of 250 mln riyals vs loss of 257 mln riyals a yr ago

* Q1 revenue 1.77 bln riyals, up 7 pct year-on-year

(Adds CEO quote, details)

By Matt Smith

DUBAI, April 21 (Reuters) - Mobile telecoms network operator Zain Saudi reported a further fall in its first-quarter net loss on Thursday and said it was still on course to turn profitable as customer numbers and revenues continue to rise.

The company, 37 percent owned by Kuwait's Zain, has yet to make a quarterly profit since launching services in 2008 and has battled to compete against better-resourced rivals Saudi Telecom Co (STC) and Etihad Etisalat (Mobily).

"Our strategy is clearly working. We have shown consistent and significant improvements across all financial metrics," Chief Executive Hassan Kabbani told Reuters by text message.

"The company is still not without its challenges, but we have a strategy which we have been actively pursuing for the past two years that will result in us posting net profits."

However, Zain Saudi made a net loss of 250 million riyals ($67 million) in the three months to March 31, according to a bourse statement, down from a net loss of 257 million riyals in the same period last year and a narrowing in losses for the ninth straight quarter.

However analysts polled by Reuters had on average forecast it would make a first-quarter net loss of 239 million riyals. Zain Saudi's share price was down 1.7 percent at 8.95 riyals by 1018 GMT, trimming the gain so far this year to 6.5 percent. The main Saudi stock index was up nearly 1 percent.

Zain Saudi's quarterly earnings before interest, depreciation, taxation and amortization (EBITDA) reached a record high of 445 million riyals, which was up from 348 million riyals a year earlier.

The subscriber base increased by 5 percent on a year ago at 11.6 million as of March 31, while revenue in the quarter was up 7 percent at 1.77 billion riyals.

"It is very important to note that year over year both our revenues and percentage gross margin are improving," Kabbani said. ($1 = 3.7490 riyals)

(Reporting by Matt Smith; Editing by Greg Mahlich) ((Hadeel.AlSayegh@thomsonreuters.com; +971566883310;))