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Tue 20 Oct 2015 06:37 PM

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Saudi Telecom sees Q3 net profit slump by 31%

Former monopoly says it made profit of $618.7m in the three months to September 30

Saudi Telecom sees Q3 net profit slump by 31%

Saudi Telecom Co (STC) reported a 31 percent drop in its third-quarter net profit on Tuesday, missing estimates as higher costs and expenses more than offset a growth in revenue.

It is the fourth quarter in the last five in which STC has reported falling profits, with the first quarter this year proving the exception.

The former monopoly operator made a net profit of 2.32 billion riyals ($618.7 million) in the three months to Sept. 30, down from 3.37 billion riyals a year before. Analysts polled by Reuters had on average forecast STC would make 3.06 billion riyals.

Weighing on the results was an increase of 1.14 billion riyals in service costs and a rise of 505 million riyals in operating expenses, it said without elaborating.

There was also a drop of 573 million riyals in net 'other income and expenses', due to costs related to an early retirement programme and foreign exchange losses primarily linked to the Turkish lira.

These factors offset a 9.7 percent increase in revenue, which climbed to 12.895 billion riyals from 11.75 billion riyals a year earlier.

Boosting revenue was a 5 percent rise in mobile working lines year on year, while the company noted "continuous strong growth in data traffic" as it builds out its 4G mobile broadband network in Saudi Arabia.

In September, STC's chief executive told Reuters his firm would spend another $1 billion in the second half of 2015 on improving its networks as it tries to meet surging demand for web-based services.

The company competes domestically with Etihad Etisalat (Mobily) and Zain Saudi, and own stakes in operators in the Gulf, Turkey, South Africa and Asia.

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