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Saudi telecom sector on growth track: report

RIYADH, December 29, 2019

The telecom sector in Saudi Arabia witnessed a healthy performance in 2019 so far, a report said, noting that leading telecom companies have registered increase in revenue year-to-date (YTD).

Saudi Telecommunications Company (STC) recorded an increase of 6 per cent year-on-year (y-o-y) while the revenues of Mobily was up 14 per cent y-o-y and Zain KSA up 12 per cent y-o-y, mainly led by low base, improved ICT/business segment and improvement in ARPU, said the Saudi Telecom Report released by Al Rajhi Capital, a leading financial services provider in the kingdom.

Going into the fourth quarter (Q4) of 2019 and 2020, there are reasons to be optimistic as there is now stability in number of expats, higher number of business/tourist visitors expected, increased business activities locally, further growth expected in business segment and increase in prices.

On the other hand, investment in 5G in 2020 could mean higher costs & capex, the report said, adding that this implies STC is unlikely to pay special dividends in 2019/2020 if it does not receive payment for receivables.

“While Zain is aggressive on 5G, we believe Mobily is likely to focus on debt repayments. We present the key trends in the space. Our target price for STC is SR91 ($24.2)/share based on equal mix of DCF and 7.5x EV/EBITDA multiple. For Mobily and Zain based on valuation multiple of 6x and 6.3x respectively, we arrive at target prices of SR24/share and SR13/share respectively,” Al Rajhi Capital said in the report. – TradeArabia News Service




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