Saudi Telecom Co. — Interim / Quarterly Report 2014

Oct 27, 2014

Saudi Telecom announces the interim consolidated financial results for the period ending on 30-09-2014 (Nine Months)

7010 · 27/10/2014 17:00:20 · Announcement #35954 · View on Saudi Exchange

Saudi Telecom announces the interim consolidated financial results for the period ending on 30-09-2014 (Nine Months)

Element	Current quarter	Similar quarter for previous year	% Change current	Previous quarter	% Change previous
Net profit (loss)	3,372	3,386	-	2,803	20.3
Gross profit (loss)	7,621	7,193	5.95	7,024	8.5
Operational profit (loss)	3,540	3,377	4.83	2,961	19.55
All figures are in (Millions) Saudi Arabia, Riyals

Element	Current period	Similar period for previous year	% Change
Net profit (loss)	8,566	6,364	34.6
Gross profit (loss)	20,856	20,422	2.13
Operational profit (loss)	9,167	8,187	11.97
Earning or loss per share, Riyals	4.28	3.18	-
All figures are in (Millions) Saudi Arabia, Riyals

Element	EXPLAINATION
Reasons of increase (decrease) for quarter compared with same quarter last year	The net profit for the 3rd quarter 2014 came similar to the net profit for the same period last year despite the 3% increase in revenue from services and the 5% increase in operating profit for the 3rd quarter compared to same period last year. The main reason is attributed to the increase of SR 151m in the provision for Zakat & Tax during the 3rd quarter compared to same period last year. Despite this increase in the provision for Zakat & Tax for the quarter, the overall improvement in the efficiency of the operations contributed to improvement in the period operating profit margin.
Reasons of increase (decrease) for period compared with same period last year	The net profit for the 9 months period of 2014 increased by SR 2,202m (35%) compared to the previous year mainly due to the following: (1) The comparable numbers for the 9 months period of 2013 includes: (A) A non-cash, non-recurring charge of SR 1,104m resulting from fair valuation of STC investments in Asia - Aircel of SR 500m and the reclassification of Axis as assets held for sale during Q2, 2013, the group re-measured the net assets related to the investment at fair value. In Q2 2013, we had booked a non-cash charge of SR 604m from losses resulting from assets held for sale related to Axis, Indonesia. (B) Net loss of SR 598 million resulting from consolidating Axis (Indonesia) financial results, which was not consolidated during the 9 months period of 2014 as a result to selling Axis (as announced in Q1, 2014) (2) The decrease in (losses from investments accounted for under equity method) during the 9 months period of 2014 by SR 1,534m compared to the same period last year. This has resulted mainly from deconsolidation of Aircel Group using the equity method effective from the 2nd quarter 2013 and sale of Axis (as announced earlier). (3) The increase in depreciation and amortization during the 9 months period of 2014 by SR 488m (10%) compared to the same period last year. (4) The increase in the provision for Zakat & Tax during the 9 months period of 2014 by SR 435m compared to the same period last year.
Reasons of increase (decrease) for quarter compared with previous quarter	The Net Profit for the 3rd quarter increased by SR 568m (20%) compared to the immediate prior quarter due to 12% decrease in cost of services compared to the previous quarter.
Reclassifications in quarterly financial results	Certain comparatives figures for the period ending at 30 September 2013 have been reclassified to conform with the presentation used for the period ending at 30 September 2014.
Other notes	Revenue from services for the 9 months of 2014 amounted to SR 34,260 million compared to SR 34,334 million for the corresponding period last year. While earnings before interest, taxes, zakat, depreciation and amortization (EBITDA) for the 3rd quarter amounted to SR 5,410 million compared to SR 4,975 million for the corresponding quarter last year, an increase of 9%, and for the 9 months EBITDA amounted to SR 14,380 million compared to SR 12,912 million for the corresponding period last year, an increase of 11%. Commenting on the results, STC Group chairman and managing director, Mr. Abdulaziz Al-Sugair, stated: (The strong financial results achieved during the third quarter and the 9 months period reflects the efforts being made to constantly evolve, improve and develop the company strategy both domestically and internationally. Despite all challenges and developments in the countries where we operate, STC managed to achieve continuous and consistent growth in acquiring market share.) Mr. Alsugair also stated, (With the important role of the telecommunications sector in transitioning the county to a digital society, STC continues to play a major role in bringing the latest technology and services to our clients. This will improve & enhance STC position domestically and will positively impact the future performance of the company, generating higher returns to the shareholders.) With regards to international operations, the 9 months period witnessed revenue growth of 18% in the controlled international subsidiaries compared to same period last year. This is mainly attributed to the continuous growth in VIVA Bahrain & VIVA Kuwait customer base and market shares during the third quarter. Domestically, during the 3rd quarter STC introduced new value added services and customized offers with the appropriate smart phones that encourages mobile usage for both post-paid and pre-paid (SAWA) subscribers. In 3rd quarter, we continued to see a huge increase in data traffic over the 4G network, and as a result wireless broadband revenue increased 22% during the 3rd quarter compared to same period last year and 16% compared to the immediate prior quarter. STC will continue with deploying 4G network as the coverage at the end of Q3 exceeded 85% of populated areas. STC continues with the deployment of the fiber optic network for both business and residential. (FTTH) customers increased 30% during the 3rd quarter compared to the same period last year. Enterprise business unit overall revenues increased 7% during the quarter compared to same period last year, driven by the 24% increase in Business sector Data circuits services revenues.

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