Riyadh – Mubasher: Saudi Telecom Company (stc) has reported a marginal decline in net profit last year, as shown by the company’s interim consolidated condensed financial results for the 12-month period ending on 31 December 2019.

Net profit after zakat and tax decreased by 0.23% in 2019 to SAR 10.755 billion, down from SAR 10.78 billion in 2018, the company disclosed in a statement to the Saudi Stock Exchange (Tadawul) on Wednesday.

This comes despite an increase in annual revenues by 4.6% to SAR 54.376 billion, up from SAR 51.96 billion in the year before.

However, the telecom company attributed the SAR 25 million decrease in profits to an increase in the revenue costs by SAR 479 million, and an increase in depreciation and amortization expense by SAR 1.207 billion due to the continuous investments in the 5G network infrastructure, fibre optics, as well as the large investments in software and systems related to cloud computing services, managed services and cybersecurity in addition to the impact of IFRS 16 adoption starting 1 January 2019.

Moreover, finance costs went up by SAR 371 million, on the back of the USD 1.25 billion Sukuk issuance and reclassification a portion of leases expenses to finance cost following the adoption of IFRS 16.

Nonetheless, stc noted that the adoption of IFRS 16 led to earnings before interest, taxes, zakat, depreciation and amortization (EBITDA) being positively impacted by SAR 766 million.

During the fourth quarter (Q4) of 2019, net profits decreased by 22.4% to SAR 2.411 billion, due to higher costs and expenses.