Saudi Telecom Co posts 27% slump in Q2 net profit

Telecom operator says it made net profit of nearly $500m in the three months to June 30
Saudi Telecom Co posts 27% slump in Q2 net profit
By Reuters
Tue 26 Jul 2016 05:24 PM

Saudi Telecom Co (STC) missed estimates as it reported a 27.1 percent fall in second-quarter profit on Tuesday, extending an earnings slump as operating expenses rose.

The results followed lower than expected earnings earlier in the day from another Saudi Arabian telecoms company, Etihad Etisalat (Mobily), which fell short of forecasts despite swinging to a net profit in the three months to June 30.

STC had reported falling profits in six of the preceding seven quarters, stalling an improvement in its bottom line that had been sparked by the operator trimming its international ambitions and refocusing on its lucrative home market.

That slump continued in the second quarter as the former monopoly made a net profit of 1.87 billion riyals ($499 million) in the three months to June 30, compared with a profit of 2.56 billion in the prior-year period, according to a bourse statement.

Four analysts polled by Reuters had on average forecast STC, which owns stakes in operators in the Gulf, Turkey and Asia, would make a quarterly profit of 2.37 billion riyals.

Explaining the poorer performance, it cited a 563 million riyals increase in operating expenses as sales and marketing costs, as well as general and administrative expenses, rose. Depreciation and amortisation costs also rose.

Profits were also dragged down by the company booking 278 million riyals in losses from investments, compared with gains of 7 million the previous year.

Mobily swung to a net profit of 18.8 million riyals in the three months to June 30 from a loss of 901 million in the prior-year period, according to a bourse statement.

In a separate statement, STC said its board was proposing a cash dividend for the second quarter of 1 riyal per share, the same as for the corresponding period of 2015.

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