Saudi Telecom posts 32% slump in Q4 net profit

Gulf's number 1 telco by market value says it will pay higher dividend despite drop in profits
Saudi Telecom posts 32% slump in Q4 net profit
By Reuters
Mon 19 Jan 2015 05:55 PM

Saudi Telecom Co's (STC) fourth-quarter profit slumped 32.6 percent as gains on a property deal with the government failed to make up for higher expenses and losses on investments.

The Gulf's No.1 telecom operator by market value made a net profit of 2.44 billion riyals ($649.8 million) in the three months to Dec. 31, down from 3.62 billion riyals in the prior-year period.

It missed analysts' forecasts for net profit of 3.32 billion riyals.

STC, which own stakes in operators in the Gulf, Turkey, South Africa and Asia, said a 19 percent year-on-year rise in expenses was behind the fall.

This included a 399 million riyal one-time impairment on its 35 percent stake in Dubai-based operator Oger Telecom, which owns a 55 percent stake in Turk Telekom.

It also booked a separate 164 million riyal loss because of an accounting method change for its investment inIndia's Aircel Group. The Aircel accounting change was behind a nine-fold year-on-year profit growth recorded in the same quarter of 2013.

These losses, plus other expenses, wiped out gains worth 595 million riyals booked as compensation for expropriated land and buildings in an upmarket area of Riyadh.

In December, the former monopoly said it would book a 621 million riyal gain on the expropriation but that the investment had not been fairly valued and it would appeal.

Quarterly revenue was also 5.2 percent up year on year at 11.85 billion riyals.

Despite the profit fall, the company said it would hike dividends to 1 riyal per share for the final three months of 2014. That compares with 0.75 riyals for the corresponding period of 2013, according to Thomson Reuters data.

Group Chairman Abdulaziz al-Sugair repeated that the company was evaluating options over its international portfolio, without giving specifics.

The firm has been focusing on its domestic business under Sugair, who took over in June 2012. It sold its Indonesian subsidiary AXIS in September 2013.

For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.