Telco blames worsening performance on crackdown on illegal workers, drop in religious pilgrims
Zain Saudi missed analyst forecasts by posting a widening fourth-quarter loss on Monday and the telecom operator blamed Saudi Arabia's crackdown on illegal workers and a drop in religious pilgrims visiting the kingdom for falling revenue.
Saudi Arabia's No.3 mobile company in terms of subscribers, 37-percent owned by Kuwait's Zain, made a net loss of SR462 million ($123.2 million) in the three months to December 31, a bourse filing showed. This compared with a net loss of SR443 million in the same period in 2012.
Analysts polled by Reuters on average forecast the company would make a quarterly loss of SR375.7 million.
Fourth-quarter revenue was SR1.5 billion, down from SR1.7 billion a year ago, according to Reuters calculations.
The company said revenue was hit in part by a government crackdown on illegal workers. Since March, more than 1 million foreigners have left the kingdom.
The government also allowed fewer Hajj pilgrims to visit the country this year because of building work at some holy sites, which also hurt Zain Saudi's revenue. Pilgrims use local mobile telecom services, boosting operators' revenues.
Zain Saudi's full-year net loss for 2013 was SR1.65 billion, the company said. This compares with a loss of SR1.75 billion a year earlier.
The total number of mobile phone subscriptions in Saudi Arabia has fallen from a peak of 56.1 million as of Sept. 30 2011, to 51 million as of Sept. 30 2013, data from the industry regulator shows.
Zain Saudi has yet to make a quarterly profit since launching operations in 2008, but made significant steps in easing its debt burden last year; in July, it extended a $2.3 billion Islamic loan facility at a lower profit rate.
It also agreed a deal with the government in June that would allow it to defer payment of licence-related fees, which could total around $1.49 billion over seven years, and appointed industry veteran Hassan Kabbani as chief executive in September.