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Operational expenses boost Mobily, pressure Zain, STC in Q1 – Report

Operational expenses boost Mobily, pressure Zain, STC in Q1 – Report
Net profits for the three operators retreated 2.72% (Photo credit: Arabianeye-Reuters)
ATHEEB TELECOM
7040
52.23% 95.60 32.80
STC
7010
-4.35% 39.60 -1.80
ETIHAD ETISALAT
7020
10.16% 52.60 4.85

ZAIN KSA
7030
-8.68% 12.62 -1.20

 

By: Thabet Shehata

Riyadh – Mubasher: Playing a major role in Saudi telecom firms' profits in Q1-16, operational expenses positively impacted Etihad Etisalat "Mobily" and turned the company profitable, but seemed to have an adverse effect on both Saudi Telecom Company (STC) and Zain KSA.

Net profits for the three operators, whose fiscal year ends on 31 December, retreated 2.72% to SAR 2.14 billion ($571 million) in Q1-16, from SAR 2.2 billion ($587 million) in the same period in 2015, according to statistics by Mubasher.

The includes the abovementioned firms added to Etihad Atheeb Telecommunication "GO", whose fiscal year ends in March.

Total operational profits for Mobily, STC and Zain declined 7.7% to SAR 3.1 billion ($830,000) in Q1-16 from SAR 3.37 billion ($900,000) in the year-ago period, whereas operational expenses grew 2.23% to SAR 7.12 billion ($1.9 billion) for the three firms from SAR 6.97 billion ($1.86 billion) in Q1-15, according to statistics by Mubasher.

STC, the largest operator in the group, posted a net profit of SAR 2.37 billion ($632 million) in Q1-16, a 5% decline from SAR 2.5 billion ($667 million) the year before.

The company stated that its total income was lower during Q1-16 reaching SAR 323 million ($86.14 million) on a year-on-year basis due to an increase in the cost of its services by 12.3%. This came despite a growth in service revenues to SAR 285 million ($76.01 million).

STC's operating expenses were up 1.27% year-on-year to SAR 4.2 billion ($1.10 billion) in the first three months of the year compared to SAR 4.16 billion ($1.11 billion). The company attributed the rise to growing general and administrative expenses.

Meanwhile, Mobily said it turned profitable in Q1-16 with SAR 17 million ($4.53 million) against a net loss of SAR 45 million ($12 million) in Q1-15. It said an improvement in profit margin before EBITDA, reaching SAR 184 million ($49.07 million), along with efforts to improve operational efficiency have allowed it to turn profitable during the period.

Mobily noted that operating expenses were down 4.4% year-on-year to SAR 1.79 billion ($480 million) from SAR 1.87 billion ($500 million) in Q1-15.

These financial results reflect Mobily’s successful strategy that aims to control costs and expenses as well as see better returns on investments and fixed assets, Mobily CEO Ahmad Farroukh told Mubasher.

On the other hand, Zain KSA succeeded in reducing its losses by 3% in Q1-16 to SAR 250 million ($66.68 million) from SAR 257 million ($68.54 million) in the same period the year before. It ascribed its decline in losses to strong revenues of SAR 1.77 billion ($470 million), the highest in the company's history, due to growing demand for Zain's services.

Zain's operating expenses grew significantly by 19.7% during the first three months of the year to SAR 1.1 billion ($290 million), compared to SAR 933 million ($248.83 million) in the corresponding period of 2015. CEO Hassan Kabbani attributed Zain’s losses in Q1-16 to paying licence costs worth SAR 900 million ($240.03 million) annually.

As for Etihad Atheeb Telecommunication, whose fiscal year ends in March, financials showed a net loss of SAR 62.64 million ($16.71 million) in Q4, up 85.7% from SAR 33.73 million ($9 million) in the same period last year. It ascribed its increased losses to 70.2% lower revenues.

 

Translated by: Nada Adel Sobhi