Saudi Telecom profit up on more subscribers

ADDITIONAL CUSTOMERS: STC saw profit rise 11.4% during the first quarter to $808 million. (Getty Images)

Saudi Telecom Company (STC) posted its biggest rise in profit in the first quarter in a year after the second-largest Arab telecom firm by market value added customers.

Net income in the three months to March 31 rose 11.4% to 3.03 billion riyals ($808 million), or 1.51 riyals per share, compared with 2.72 billion riyals, or 1.36 riyals per share, in the year-earlier period, STC said in a statement on the bourse website.

"It was due to an increase in revenue and growth in the mobile and broadband services, knowing that the number of customers grew 23%," STC said.

Analysts' forecasts for STC's first-quarter profit ranged from 2.75 billion to 3.23 billion riyals in a survey by newswire Reuters last month.

Operating revenue advanced 21% to 9.58 billion riyals after "readjustment of the comparative figures for 2007", STC said, without elaborating.

Shares of STC were down almost 23% to Saturday's close, compared with 13% for the main stock index. The stock fell 0.39% on Sunday before the results were released.

The company began consolidating the Turkish and South African businesses acquired for $2.56 billion this year through a 35% stake in Oger Telecom. Its earlier and first foreign ventures, in Asia and Kuwait, have yet to start making money.

Saud Al-Duweish, STC's chief executive, said in January the Oger Telecom purchase would boost profit by 4% and revenue by 30% in 2008.

STC lagged regional rivals in growth terms, having made its first foreign investment last year, taking a 25% stake in Malaysia's Maxis in a $3 billion deal that opened up markets in India and Indonesia.

Still, those operations have yet to start making profit, board member Abdul-Rahman Mazi said in January.

STC also secured 26% of Kuwait's third mobile phone company for $908 million in November. The Kuwait business has yet to start operations.

At home, STC has been losing ground to rival Etihad Etisalat (Mobily), which grew to a 40% market share by the end of 2007 from 30% a year earlier.

Oger Telecom owns 55% of fixed-line operator Turk Telekom and 75% of Cell C, South Africa's third-largest mobile operator. It offers internet services in Saudi Arabia, Lebanon and Jordan. Oger Telecom had 35 million users and revenues of $6.9 billion in 2006.

Its parent, Saudi Oger, is a construction company controlled by the family of late Lebanese prime minister Rafik Al-Hariri.

STC plans to pay a dividend of 1 riyal per share for the first quarter. (Reuters)

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