STC reports strong Q1 revenues and 60% net profit growth

Saudi Telecom Group (STC) today announced the company’s preliminary consolidated financial results for the first quarter ending 31 March 2012. Consolidated revenues increased 12% compared to same period last year EBITDA grew by 12% compared to same period last year Net profit increased by 60% Fixed Broadband subscribers increased by 22% compared to Q1 2011. STC enjoyed a positive start to 2012 by continuing to deliver strong revenue and profitable growth. For the first quarter, the Company reported a 12% increase in consolidated revenues which reached SR 14,679 million compared to SR 13,076 million in Q1 2011. As a result to the overall enhancement in the operations efficiency, Operating profit for the first quarter increased 19% to reach SR 3,178 million compared to SR 2,669 million for the same period in 2011. Earnings before interest, Zakat and taxes, depreciation and amortization (EBITDA) for Q1 2012 increased 12% to SR 5,374 million compared to SR 4,815 million in Q1 2011. STC reported a 60% increase in net profit from SR 1,573 million in Q1 2011 to SR 2,521 million in Q1 2012, representing 8% growth over the previous quarter (as per the audited Financial statements). The increase in net income for the 1st quarter of 2012 compared to the same period last year is attributed to the 12% increase in operating revenue which came as a result to the growth in all of the group services revenue, PSTN, ALJAWAL (mobile), Business sector and Wholesales. In addition, the overall improvement in operations efficiency have contributed to this increase. The Company also witnessed strong demand for fixed and wireless broadband services during the period, STC’s position as the region’s broadband provider of choice is one of the key reasons for the company’s continued strength in the domestic market, acquiring additional market share during the quarter and continues to maintain the largest share in the local market, as well as the STC’s successful expansion and acquiring additional market share overseas in the Middle East, Turkey, South East Asia, India and South Africa. The continued strong company performance and commitment to delivering shareholder value has lead the Board of Directors to approve the distribution of a total of SR 1,000 million in cash dividend for Q1 2012, representing SR 0.5 per share. Commenting on the results, STC Group CEO, Engineer Saud Al-Daweesh, said: "I am pleased to be able to announce such strong results. We have continued to further strengthen our position as one of the largest and most technologically advanced telecom operators both in our domestic market as well as in international markets. This success materialized as a result of our continued efforts to offer innovative and integrated products and services that address the needs of our customers, as well as our continued efforts to improve and sustain our operational and financial performance. STC group has succeeded in remaining at the forefront of the telecommunications and information technology sectors in the Middle East and beyond, by optimising operations and leveraging our expertise & our strength in providing our customers with the latest technologies & services with key focus on customer experience. This has supported our growth both domestically and internationally. This quarter’s performance also validates our continued efforts to drive financial performance, and to remain agile, providing shareholders with above average returns, by streamlining controls and embedding strategies that ensure long term profitable growth. We have a clear and strong growth strategy in place and we remain committed to consistent delivery and performance. We see significant growth potential both domestically and internationally, and we believe that our strong market position and expanding presence in the Kingdom of Saudi Arabia and key growth markets ensures that we are well placed to leverage growth opportunities both in the domestic and international markets. As a result, we are confident that we can deliver significant value to our shareholders in the future.” Domestic subscriber growth in mobile and mobile broadband driven by 4G network expansion & smart-devices Domestic KSA revenues from mobile broadband services grew 145% in Q1 2012 to compared to the same period in 2011. This can be partially attributed to the growth in the number of domestic mobile subscribers which increased by 14% compared to the same period last year, as a result of the innovative packages and bundles that STC has introduced. In addition, the company’s constant efforts to lead through investing in technology and innovative solutions, STC has continued to extend its 4G network and provide speeds of up to 100 MB/second, as well as to further enhance delivery of the Company’s 42 MB/second service to 3G customers. These efforts have played an important role in this quarter’s growth in this segment. The Company’s continued delivery of QUICKnet services and flexible bundle offers, designed to fulfil the needs of our customers has also contributed to this growth. Smart devices in particular played a significant role in this quarter’s performance. The Company now exclusively offers more than 20 smart devices and tablets which are considered the most advanced by manufacturers in international markets. Strong subscriber growth in fixed broadband and multi-play packages Fixed broadband customers increased 22% in Q1 2012, compared to Q1 2011. This can be attributed to the growth in the number of fiber to the home ("FTTH") service subscribers, and as a result to STC’s investment in deploying FTTH domestically enabling the launch of current & new applications and to provide the platform for future advanced services. STC plans to connect 500,000 homes with Fiber by the end of 2012. This network enabled the increase in the number of subscribers to InVISION (STC’s Interactive TV service) by 31% compared to Q4 2011. STC continuously seeks to differentiate itself through providing an integrated customer experience with tailored and high-quality, next generation services Continued growth in STC’s enterprise segment STC also witnessed sound performance in the enterprise segment. Revenues from this segment increased 24% in Q1 2012 compared to the same quarter of 2011. In addition, the Company has continued to invest in infrastructure. Internet capacity grew more than 60% in the first quarter, compared to the same period in 2011. Ongoing product & service innovation During the first quarter, STC also launched its first drive-thru self-service machine, which provides more than 35 services for mobile and fixed-line. This is considered one of the most advanced and innovative solutions in the market. This service, which STC offers exclusively to its customers, provides instant and convenient access for customers and enables them to pay their bills, apply for new fixed-lines, and activate lines or mobile packages. This builds on the network of more than 112 self-service machines spread around public places, such as malls. International growth driven by increased market share & network expansion in India, Indonesia and South Africa At the international level, STC’s subsidiaries and affiliate companies continue to grow driven by continued subscriber additions. STC’s subscriber base now includes more than 160 million subscribers globally. STC continues to expand its networks in India, Indonesia and South Africa, with the aim of attracting more customers, increasing market share, increasing revenues while maintaining profitability. Continuous quality control During the quarter STC achieved recognition for the quality of the company’s operational systems by winning the world renowned certificate for quality - ISO 9001:2008. This resulted from the efforts of a specialist team within STC to implement a comprehensive quality management system in accordance with world recognised standards. In this respect, STC is now ahead of other telecommunications’ operators and service providers in the Saudi market. Continuous quality control During the quarter STC achieved recognition for the quality of the company’s operational systems by winning the world renowned certificate for quality - ISO 9001:2008. This resulted from the efforts of a specialist team within STC to implement a comprehensive quality management system in accordance with world recognised standards. In this respect, STC is now ahead of other telecommunications’ operators and service providers in the Saudi market.


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