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Saudi Telecom Company (stc) announces its interim condensed consolidated financial results for the period ending on 31-03-2020 (Three Months)

STC 7010 -4.23% 39.65 -1.75
Element List Current Quarter Similar quarter for previous year %Change Previous Quarter % Change
Sales/Revenue 13,935 13,386 4.101 13,265 5.05
Gross Profit (Loss) 8,196 7,903 3.707 8,360 -1.961
Operational Profit (Loss) 3,004 3,275 -8.274 2,400 25.166
Net Profit (Loss) after Zakat and Tax 2,913 2,750 5.927 2,321 25.506
Total Comprehensive Income 3,099 2,850 8.736 2,457 26.129
All figures are in (Millions) Saudi Arabia, Riyals
Element List Current Period Similar period for previous year %Change
Total Share Holders Equity (after Deducting Minority Equity) 62,870 68,364 -8.036
Profit (Loss) per Share 1.46 1.37
All figures are in (Millions) Saudi Arabia, Riyals
Element List Explanation
Increase (Decrease) in Net Profit for Current Quarter Compared to the Same Quarter of the Previous Year is Attributed to The SR 163m increase in net profit for the 1st quarter of 2020 compared to the comparable quarter last year is attributed mainly to the following:

1) An increase in revenues by SR 549m, which was offset by an increase in cost of revenues by SR 257m, that led to an increase in gross profit of SR 292m.

2) The increase in operating expenses by SR 564m, mainly due to:

- An increase in selling and marketing expenses by SR 289m, mainly due to the booking of an impairment loss on trade receivables.

- An increase in depreciation and amortization by an amount of SR 216m.

3) The booking of other income (expenses) with an amount of SR 177m compared to SR (287m), mainly due to the booking of other gains, net of SR 431m compared to SR 7m, as a result of booking the gain against selling the company’s direct share in Careem after completing Uber’s acquisition.

Increase (Decrease) in Net Profit for Current Quarter Compared to the Previous Quarter is Attributed to The SR 592m increase in net profit for the 1st quarter of 2020 compared to the last quarter is attributed mainly to the following:

1) An increase in revenues by SR 670m, which was offset by an increase in the cost of revenues by SR 834m, that led to a decrease in the gross profit by SR 164m.

2) A decrease in the operating expenses of SR 768m, mainly due to a decrease in the selling and marketing expenses by SR 437m, a decrease in general and administrative expenses decreased by SR 70m and a decrease in depreciation and amortization by SR 261m.

3) The booking of other income (expenses) with an amount of SR 177m compared to SR 86m was mainly due to the booking of net other gains of SR 431m compared to SR 198m, as a result of booking the gain from selling the company’s direct share in Careem after completing Uber’s acquisition.

Basis of the External Auditor's Opinion Unmodified opinion
Reclassification of Comparison Items Certain comparative figures have been reclassified to conform with the classification used for the period ended 31 March 2020.
Additional Information Earnings before depreciation, amortization, interest, zakat and taxes (EBITDA) for the first quarter was SR 5,330m, compared to SR 5,386m for the same quarter last year, with a decrease of (1.04%).

Commenting on these results, Eng. Nasser bin Sulaiman Al-Nasser, GCEO of Saudi Telecom Company (stc), indicated that the company, despite the emerging epidemic conditions of the Corona Virus (COVID-19), was able to grow its top line by 4.1%. As a result, stc’s business units achieved distinct growth in revenue during the current quarter compared to the same quarter of the previous year. Where the increase of Enterprise Business Unit revenues were supported by innovative products in the field of Internet of Things, cloud computing and Cyber security in addition to other telecom products and services. Further, the Wholesale Business Unit revenue also increased supported by the growth witnessed in Hubbing services. As for Consumer Business unit, revenue has increased with the support of an increase in fiber optic subscribers by 23% and data revenue by 15.5%.

As a testimony of KSA global leading position in communications infrastructure in general, and in digital communications in particular, KSA was successfully ranked number 10 globally (coming from number 105) in the internet speed in 3 years only. On top of that, stc’s internet speed has increased 7 times over the past 3 years. stc winning two Speedtest Awards for the fastest mobile network, and best mobile coverage in the kingdom in 2019, shows the company's commitment to provide the best services to its customers. In addition, stc won the Customer Experience Management Award for 2020 after competing with the largest global telecom operators.

Part of our journey for digital transformation and enriching customer’s experience, paper contracts had been dispensed and 7 million contracts on annual basis were digitized which in return will contribute to save around 200,000 hours of customers waiting time annually. In addition, stc is expanding in the telecom towers infrastructure by building new towers in the Kingdom while at the same time keeping-up with the technological progress such as 5G and the requirements of improving the network and increasing its speed. Also, the Saudi digital payments company (stcPay) obtained the official license from the Saudi Arabia Agency (SAMA), as an electronic digital wallet in the field of financial technology (fintech), to be the first financial technological company licensed in the kingdom. stcPay is considered the largest financial digital wallet in the Middle East and North African region with 2 million customers.

Lastly, what we are living nowadays under the unfortunate conditions to combat the COVID-19 virus, motivates us to continue our daily work proactively by taking the necessary actions and decisions to provide all our capabilities to actively handle the situation and reaffirm stc’s position as a national operator and the first enabler for digital transformation. As a result, stc has increased the network’s capacity to its maximum levels by distributing traffic in accordance with the increasing demand. It has also enhanced the telecom services and their capacity, and provided urgent services to several entities to enable digital transformation for all sectors. On another side, stc provided 40,000 free internet SIM cards as part of its “Attaa Digital” initiative to support those who cannot access the Internet and educational platforms as well as enabling a free access to some educational and health platforms. Furthermore, recently stc has announced that it will bear the cost of the temporary service suspension fees for SMEs who wish to temporarily suspend their services as part of the company’s efforts to mitigate the financial impacts that may affect this vital sector. In addition, stc extended the payment grace period for customers and likewise doubled the data capacity without any additional charges for its existing and new customers to support the educational process and enable employees of government and private sectors to fulfil their work duties in light of the precautionary measures taken by the Kingdom of Saudi Arabia. Part of its social responsibility, stc sent more than 2 billion awareness COVID-19 messages in 10 different languages. Currently, we are conducting a comprehensive study on the potential effects on the company's business in the event that the Corona pandemic continues, based on the measures and decisions taken to combat it. Any expected impact after conducting the study will be announced through the official channels in due course.

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