Saudi Telecom Q2 net income plunges 31pc
Riyadh, July 21, 2010
State-controlled Saudi Telecom (STC) made net income of SR2.06 billion ($549.3 million) in the three months to end-June, down 31 per cent from SR2.99 billion a year earlier, it said in a statement on the bourse website.
It posted a drop in second-quarter net profit within analysts' forecasts as it continues to pay the cost of strong competition at home and bear the financial burden of foreign expansion.
This was within a SR1.6 billion to 2.41 billion range predicted by five analysts in a Reuters survey, according to a report in our sister newspaper the Gulf Daily News.
The country's largest telecoms group by market value saw its operating income fall 27 per cent year on year to SR2.35 billion, slightly below its level in the first quarter of this year.
It did not explain the annual drop in quarterly earnings.
Instead, it said a 30 per cent fall in net profit during the first half, stemmed from higher costs linked to the usage of external networks - an apparent reference to its local competitors - lower tariffs for international calls and higher spending to deploy optic fiber.
It will give shareholders a SR0.75 dividend for the second quarter, equivalent to 73 per cent of its earnings per share for the period.
The company has spent about $7 billion since 2007 to aggressively strengthen its foreign presence, mainly in Asia, while the domestic market it once monopolised opened to more players.
This has put the company under intense pressure to maintain profitability levels as a telecom war heats up in the region with such rivals as Kuwait's Zain and Emirates Telecommunications.
STC's shares are down 13.2 per cent this year while those of its immediate rival Mobily are up 18.7 per cent. – TradeArabia News Service