Saudi telecom's profit beats forecasts

Saudi telecom’s profit beats forecasts

Saudi Telecom Co (STC), the Gulf's No.1 telecoms operator, reported a 6.7 percent rise in second-quarter profit on Wednesday, beating analysts' estimates.

July 19, 2012 12:35 by Reuters

Saudi Telecom Co (STC), the Gulf’s No.1 telecoms operator, reported a 6.7 percent rise in second-quarter profit on Wednesday, beating analysts’ estimates.

It attributed the profit growth to an increase in its domestic broadband, business services and wholesales services sales, as well as higher revenue from international operations.

The former monopoly made a net profit of 2.41 billion riyals ($642.7 million) in the three months to June 30, up from 2.26 billion riyals in the year-earlier period, it said in a bourse statement.

Eight analysts polled by Reuters on average forecast STC would make a quarterly profit of 2.27 billion riyals.

The company added that its operating income rose 13.5 percent to 3.16 billion riyals and its revenue from services rose 4.9 percent to 14.56 billion riyals.

The telco said in a separate statement it would pay a dividend of 0.5 riyals a share for the second quarter.

Soaring demand for broadband has lifted STC’s earnings in recent quarters, with the state-run firm offering bundle packages to woo back customers from rival operators Etihad Etisalat (Mobily), an affiliate of the United Arab Emirates’ Etisalat, and Zain Saudi, part-owned by Kuwait’s Zain.

STC, which remains majority government-owned nearly a decade after its partial privatisation, is the largest Gulf telecoms operator by market value with operations across the Muslim world from Turkey to Indonesia.

Morgan Stanley in June upgraded STC’s stock to overweight and raised its price target to 48 riyals from 39 riyals, saying earnings and dividends were likely to increase.

($1 = 3.7500 Saudi riyals)

(Reporting by Angus McDowall and Matt Smith; Editing by David French)