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Wed 20 Jan 2010 03:02 AM

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Saudi Telecom Q4 net profit up on Maxi IPO

STC under enormous pressure to sustain growth as regional telecom war heats up

Saudi Telecom Q4 net profit up on Maxi IPO
CAPITAL GAINS: Saudi Telecoms posted a better than expected 154% rise in Q4 net profit. (Getty Images)

Saudi Telecom Co(STC), the Arab world's largest telecom company by market value, posted a better than expected 154 percent rise in fourth quarter net profit, partially helped by capital gains.

STC made $784 million in the three months to the end of December, compared to $309.3 million a year earlier, the state controlled firm said in a statement.

This was more than the highest forecast in a Reuters survey of analysts, which ranged from $479.9 million to $743.9 million.

STC said it netted $182.3 million from the flotation in November of a 25 percent stake in Malaysia's Maxis Bhd.

However, annual earnings per share, fell 2 percent to $1.44.

Operating profit also fell 8.2 percent to $690.5 millions during the fourth quarter, which this year coincided with the annual haj pilgrimage and the arrival of almost 1.5 million visitors from abroad, many who used Saudi mobile phone networks.

STC's full year operating profit fell 16.8 percent to $3.40 billion.

The firm said revenue from operations exceeded $13.3 billion in 2009 but did not give an exact figure. Based on this figure, annual growth in operating revenue would have been about 5.3 percent in 2009, down from 38 percent it reported for 2008.

The company's board proposed to give shareholders a dividend of $0.19 per share for the fourth quarter, bringing the overall dividend payout for 2009 to 3 riyals, down from $0.99 it distributed in 2008.

STC is under intense pressure to sustain its profitability growth as a telecom war has been heating up in the region with such rivals as Kuwait's Zain and Emirates Telecommunications.

Cell operator Etihad Etisalat (Mobily), STC's stongest rival, posted a better than expected 35 percent in fourth-quarter net profit to a record $279.9 million.

STC spent about $3.5 billion in 2008 to buy a 35 percent stake in Oger Telecom and a 26 percent stake in Kuwait's third mobile phone licence.

In 2007, it spent $3 billion to take a 25 percent stake in Maxis, a deal that opened markets in Malaysia, Indonesia and India. (Reuters)

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