1) While consolidated revenue increased by SR 1,037m, the cost of services increased by SR 68m only; which resulted in a SR 969m increase in Gross profit.

2) The SR 326m increase in Operating Expenses is mainly due to an increase in the general & administration expenses by SR 245m and depreciation & amortization by SR 216m, while selling & marketing expenses decreased by SR 135m.

3) A loss in an amount of SR (287m) from other income and expenses compared to a gain in an amount of SR 224m; mainly due to the following:

• The record of SR 150m as cost of early retirement program in Q1 2019, while nothing was recoded in Q1 2018

• The increase in finance cost by SR 67m mainly due to the increase in cost of finance and the reclassification of leases from operating expenses to depreciation and finance cost following the adoption of IFRS 16 starting 1st January 2019.

• A loss in an amount of SR (126m) in other expenses/income, net compared to a gain in an amount of SR 94m.

1) the increase in the consolidated revenue by SR 324m, while cost of revenue increase by SR 1,053m, which resulted to a decrease in gross profit by SR 729m. Q4 2018 contained a reversal in an amount of SR 579m under cost of revenue with respect to the amendment of the mechanism for calculating the commercial services provisioning fees starting from 1/1/2018, after signing a comprehensive agreement with government related parties in December 2018.

2) The SR 528m decrease in Operating Expenses; mainly due to the following:

The decrease in selling & marketing expenses by SR 342m and the decrease in general & administration expenses by SR 383m; while depreciation and amortization increased by SR 197m.

3) A loss in an amount of SR (287m) for other income and expenses compared to a loss of SR (157m); mainly due to the following

• The record of SR 150m as cost of early retirement program in Q1 2019, compared to SR 18m in Q4 2018

• The increase in finance cost by SR 76m mainly due to the increase in cost of finance and the reclassification of leases from operating expenses to depreciation and finance cost following the adoption of IFRS 16 starting 1st January 2019.

No financial impact was recorded with respect to the Group's investment in Careem in Q1 2019. The final impact will be recognized upon the completion of regulatory procedures and requirements.

Commenting on the results, Eng. Nasser Bin Sulaiman Al Nasser, STC Group CEO, stated: what has been achieved in this quarter compared to the comparable quarter last year was a result of our commitment to implement and achieve STC’s strategic plans. The commitment to provide the best technical services, the cost optimization initiatives, and the outstanding performance of our subsidiaries as well as, the investments in traditional and non-traditional sectors both had a positive impact on the financial results of the first quarter of this year.

He further added, part of the company's strategy is to invest in new and diverse domains that can enable the digital transformation and enrich the customers’ experience. STC will continue to play its role as an incubator for creative projects and ideas that capture the rapid changes in the telecom industry, customer needs and requirements as both innovation and investment are key factors to accelerate and achieve the digital transformation.

In order to establish our pivotal role in enabling digital transformation within the guidelines of vision 2030, STC has signed three strategic agreements with international companies as part of the " 5G Aspiration Project " to deploy the 5G network and develop innovative services and solutions related to latest generation of networks and communication technologies, which comes across our commitment to launch one of the fastest network in the world.