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Etihad Etisalat Co. announces the annual financial results for the period ending on 2018-12-31

ETIHAD ETISALAT 7020 3.58% 47.75 1.65

Element List Current Quarter Similar quarter for previous year %Change Previous Quarter % Change
Sales/Revenue 3,162 2,827 11.85 2,976 6.25
Total Profit (Loss) 1,386 1,560 -11.153 1,758 -21.16
Profit (Loss) Operational 267 -7 - 108 147.222
Net Profit (Loss) after Zakat and Tax 80 -182 - -31 -
Total Comprehensive Income 62.55 -181 - -36.6 -
All figures are in (Millions) Saudi Arabia, Riyals
Element List Current Period Similar period for previous year %Change
Sales/Revenue 11,865 11,351 4.528
Total Profit (Loss) 6,582 6,530 0.796
Profit (Loss) Operational 603 19 3,073.684
Net Profit (Loss) after Zakat and Tax -123 -709 -82.651
Total Comprehensive Income -170.4 -701.1 -75.695
Total Share Holders Equity (after deducting minority equity) 13,869 14,254 -2.7
Profit (Loss) per Share -0.16 -0.92
All figures are in (Millions) Saudi Arabia, Riyals
Element List Explanation
Reason for increase (decrease) in net profit for current quarter compared to the same quarter of the previous year Mobily achieved a positive net profit for the first time since Q2 2016, where Q4 2018 net profit reached SAR 80 million compared with losses at SAR 182 million in Q4 2017. This is mainly due to the following:

Revenues:

Mobily continued to improve its revenues for the sixth consecutive quarter, Q4 2018 revenues witnessed a YoY growth of 11.9%, and amounted to SAR 3,162 Million versus SAR 2,827 Million in Q4 2017. This is mainly attributed to the following:

1- Continued growth of subscribers base and improvement of subscribers mix

2- Continued growth in data revenues.

3- Continued growth in business unit revenues.

4- Continued growth in FTTH revenues.

This was achieved despite the market, regulatory and economic challenges including the reduction of mobile termination rates. Taking out the impact of the decrease of the mobile termination rates, quarterly revenues would have grown by 14%.

Gross profit

Q4 2018 Gross profit decreased by 11.2% to SAR 1,386 million versus SAR 1,560 million in Q4 2017. This is mainly attributed to the impact of the cost of sales by the new mechanism for the calculation of service royalties and license royalties (government fees) previously announced, which was calculated retrospectively for 2018 in the fourth quarter.

EBITDA

For the fifth consecutive quarter, Mobily improved its EBITDA reaching SAR 1,341 million in Q4 2018 versus SAR 911 million in Q4 2017, or an increase of 47%.The EBITDA improvement attributed to the increase in revenues, the improvement in operational performance supported by increasing in the efficiency in managing the operational expenses and the reversal of provisions related to government fees, which exceeded all the negative impact resulted from the change in the mechanism of calculating government fees.

EBITDA margin reached 42% for Q4 2018 versus 32% for the same quarter last year.

Operational profit (EBIT)

Operational profit for Q4 2018 reached SAR 267 million compared to operational loss of SAR 7 million in Q4 2017 reflecting the improvement in EBITDA.

Financial charges and Zakat

Despite the company ability in reducing net debt and the reduction of financing costs for some debt, the financial charges for Q4 2018 increased to SAR 214 million compared to SAR 163 million in Q4 2017 due to the increase in SIBOR and ceasing capitalization of some expenses related to the debt.

The positive impact of the reversal of Zakat expenses amounted to SAR +14 million compared to Zakat expense of SAR -15 million in Q4 2017.

Reason for increase (decrease) in net profit for current quarter compared to the previous quarter Mobily achieved a positive net profit for the first time since Q2 2016, where Q4 2018 recorded net profit amounted to SAR 80 million compared to net loss amounted to SAR 31 million for Q3 2018. This is mainly due to the following:

Revenues

Mobily increased its revenues for Q4 2018 by 6.2% reaching SAR 3,162 million versus SAR 2,976 million in Q3 2018. This is mainly attributed to the followings:

1- Continued growth of subscribers base and improvement of subscribers mix

2- Continued growth in data revenues.

3- Continued growth in business unit revenues.

4- Continued growth in FTTH revenues.

Gross profit

Gross profit for Q4 2018 decreased by 21.2% reaching SAR 1,386 million versus SAR 1,758 million in Q3 2018. This decrease was mainly attributed to the impact of the cost of sales by the new mechanism for the calculation of government fees, which was calculated retrospectively for 2018 in the fourth quarter.

EBITDA

EBITDA for Q4 2018 improved to reach SAR 1,341 million versus SAR 1,087 million in Q3 2018, representing an increase of 23.4%. This reflects the company efficiency in managing its operational expenses, the decrease in G&A expenses and the reversal of provisions related to government fees, which exceeded all the negative impact resulted from the change in the mechanism of calculating government fees.

EBITDA margin reached 42% in Q4 2018 versus 37% in Q3 2018.

Operational profit (EBIT)

Operational profit amounted to SAR 267 million versus SAR 108 million in Q3 2018 an increase of 147.2%.

Financial charges and Zakat

Despite the company ability in reducing net debt and the reduction of financing costs for some debts, the financial charges for Q4 2018 increased to SAR 214 million versus SAR 205.8 million in Q3 2018, as a result of the increase in SIBOR.

The positive impact of the reversal of Zakat expenses amounted to SAR +14 million versus a positive impact of Zakat expense of SAR +55 million in Q3 2018.

Reason for increase (decrease) in net profit for current period compared to the similar period of the previous year Mobily reduced its net losses by 82.7% for the year ended in 31st December 2018, where the net losses for the year 2018 amounted to SAR 123 million versus net losses of SAR 709 million for the year 2017. This improvement is mainly due to:

Revenues:

Mobily continued in growing its revenues by 4.5% to reach SAR 11,865 million for the year 2018 versus SAR 11,351 million for the year 2017. This is mainly attributed to the followings:

1- Continued growth of subscribers base and improvement of subscribers mix

2- Continued growth in data revenues.

3- Continued growth in business unit revenues.

4- Continued growth in FTTH revenues.

This has been achieved despite the market, regulatory and economic challenges, including:

(1) The reduction of mobile termination rates.

(2) The continuous adverse impact from releasing the ban on VoIP applications on international calls revenues.

Taking out the impact of the decrease of the mobile termination rates, revenues would have grown by 6.5%.

Gross profit

Gross profit amounted to SAR 6,582 million in 2018 versus SAR 6,530 million for 2017 with an increase of 0.8%, despite the negative effect resulted from calculating the impact of the change in the mechanism of calculating government fees.

EBITDA

Mobily continued in increasing EBITDA of 2018 reaching SAR 4,531 million versus SAR 3,646 million in 2017 representing an increase of 24.3%, which is the highest EBITDA achieved in five years. The improvement in EBITDA is attributed to the increase in revenues, the improvement in operational performance supported by increasing in the efficiency in managing the operational expenses, the decrease in G&A expenses, the implementation of IFRS 15 and 9 and the reversal of provisions related to government fees, which exceeded all the negative impact resulted from the change in the mechanism of calculating government fees.

EBITDA margin reached 38% in 2018 versus 32% in 2017.

Operational profit (EBIT)

Operational profit for 2018 reached SAR 603 million versus operational profit of SAR 19 million in 2017.

Financial charges and Zakat

Despite the company ability in reducing net debt and the reduction of financing costs for some debts, the financial charges for 2018 increased to SAR 799 million versus SAR 678 million for 2017. This is mainly due to the increase in SIBOR and ceasing capitalization of some expenses related to the financing.

The positive impact of the reversal of Zakat expenses amounted to SAR +37.6 million compared to Zakat expense of SAR 61.4 million for 2017, as a result of reversing certain Zakat expenses, the net impact of which is SAR 71 million.

Type of the external auditor's opinion Unmodified opinion
Reclassifications in quarter financial result Certain figures for the comparative period have been reclassified to conform to the current period presentation.
Additional Information Debt

Mobily reduced its net debt to the lowest level since 2012, since the beginning of 2017, Mobily repaid SAR 2.7 billion. Mobily net debt amounted to SAR 11.3 billion at the end of 2018 versus SAR 12.7 billion at the end of 2017 and versus SAR 14 billion at the end of 2016.

Furthermore the company made an early repayment of SAR 1 billion, which reflects the continued concentration from the company on deleveraging.

CAPEX:

Capex in 2018 increased to SAR 2,819 million versus SAR 2,268 million in 2017. This is due to continuous deployment of network modernization project that started in Q4 2017 and the capitalization of the spectrum in 2018.

Operational Cash Flow:

Mobily increased its operational cash flow to the highest since 2011, which supported the company in deleveraging, despite the increase in CAPEX by SAR 551 million, 2018 Operational Cash Flow (EBITDA-CAPEX) reached SAR 1,712 million versus SAR 1,378 million in 2017, representing an improvement of 24% compared to the same period last year.

There are no accumulated losses at the end of 2018.

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