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Oct 30, 2013

STC reports 73% Net Income growth for the 3rd quarter 2013

Riyadh, Kingdom of Saudi Arabia, 29 October, 2013 - Saudi Telecom Company (STC) today announced the company’s preliminary financial results for the period ending at 30 September 2013 (9 months)

  • Revenues for the 9 months reached SR 34,334m, an increase of 2.5% compared to the same period last year
  • Gross profit for the 9 months reached SR 20,422m, an increase of 7% compared to the same period last year
  • Operating profit for the 9 months reached SR 8,187m, an increase of 5% compared to the same period last year
  • EBITDA for the 3rd quarter amounted to SR 4,975m, an increase of 22% compared to the same period last year. While, for the 9 months amounted to SR 12,912m, an increase of 3.5% compared to the same period last year.
  • More than 750,000 location connected with fiber optic network, and 4G network coverage exceeded 76% of populated areas
  • Wireless broadband revenue during the quarter grew 63% compared to the same period last year
  • Fixed Broadband customers during the quarter increased 6% compared to the same period last year

Net profit for the 3rd quarter reached SR 3,386m, an increase of 73% compared to the corresponding period last year, and an increase of 137% compared to the immediately prior quarter. While for the 9 months, Net profit amounted to SR 6,364m compared to SR 6,883m for the corresponding period last year, a decrease of 8%. The decrease in net profit for the 9 months of 2013 compared to the same period last year (despite the 7% increase in gross profit, the 5% increase in operating profit and with the decrease of 82% in financing cost during the period) is attributed to the following:

  1. The booking of one-time, non-recurring and non-cash charge of SR 1,104m resulting from fair valuation of STC’s investments in Asia (Aircel and Axis) during the 1st half of 2013
  2. The booking of unrealized FX losses of SR 929m due to the depreciation of Turkish Lira, Indian Rupee and Indonesian Rupiah
  3. The increase of other income in “other Income & Expenses” to reach SR 742m compared to SR 540m in the same period last year, mainly due to accruing of revenue from the projects resulting from the Universal Service Fund related to Authority of Communications and Information Technology, and revenues from devices sales and Mega projects.

Commenting on the results, STC Group chairman and managing director, Mr. Abdulaziz Al-Sugair, stated: “The strong financial results achieved during the third quarter reflects the efforts being made to constantly evolve, improve and develop the company’s strategy both domestically and internationally. We maintain an acute focus on reinforcing our presence in our home market while at the same time, we will continue with the rationalization of STC international portfolio, and continue with evaluating options for some of these investments in order to take appropriate actions in the best interest of the shareholders.”

Mr. Alsugair also stated, “STC continue to grow its operations, domestically and internationally. Revenues from domestic operations during the 9 months of 2013 increased 3% as a result to the growth in business sector services revenues and Broadband (fixed & wireless) services revenues. Also, the 9 months of 2013 experienced revenue growth of 25% in the controlled international subsidiaries compared to same period last year which lead to the overall increase of 2.5% in STC group consolidated revenue for the 9 months of 2013 compared with the same period last year.”

Mr. Alsugair concluded, “STC sees the growth in the domestic market is sustainable short to mid-term specifically in Broadband (fixed & mobile) and Business sector services, and that STC will continue to provide more focus on these growing sectors domestically and make all resources available in order to capture the largest share of this growth in the future.”

With regards to international operations, the 9 months period witnessed revenue growth of 25% in the controlled international subsidiaries compared to same period last year. Aircel (India) has made a positive EBITDA during the 3rd quarter and the performance VIVA Bahrain & Kuwait continues to be strong and above targets. As announced previously, STC has signed an Sale and Purchase Agreement (SPA) to sell its stake in Axis to PT XL Axiata Tbk. The completion of the transaction remains subject to the applicable Indonesian regulatory approvals as well as the approval of XL shareholders’ at its Extraordinary General Meeting.

While domestically, STC continues the introduction of innovative and value added services that encourage mobile usage and targeted packages bundled with advanced smart phones. This is underpinned by the Company’s customer-centric approach and its efforts to enhance the overall customers experience. The company, continued with increasing the coverage of 3G & 3.5G networks to reach various parts of the country and expanded the 4G network coverage to reach 76% of populated areas with more than 7,250 sites on air. Therefore, wireless broadband revenues grew 63% during the quarter compared to the same period last year due to the increased coverage & the launch of new products and services.

STC’s fiber optic customers (homes & Businesses) increased 146% compared to same period last year, and 10% compared to the immediate previous quarter. STC reached more than 750,000 location. The ongoing network expansion has also led to a further increase of 76% in the number of “InVISION” subscribers (STC’s Interactive TV service) compared to same period last year. Fixed broadband subscriber during this quarter grew 6% compared to same period last year. Also, the number of subscribers in bundled services grew by 8% during the quarter, compared to same period last year. Enterprise business unit overall revenues increased 16% during the quarter compared to same period last year, driven by the 35% increase in Business sector postpaid mobile revenues, 4% increase in the fixed line revenues and the increase in Data circuits services revenues by 19% during the quarter compared to same period last year. This was attributed to the 6% increase in data circuits subscribers and the 15% increase in business fixed line subscribers during the quarter compared to same period last year.


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