Saudi Telecom Co. — Interim / Quarterly Report 2015

Oct 20, 2015

Saudi Telecom Co. announces the interim consolidated financial results for the period ending on 30-09-2015 (Nine Months)

7010 · 20/10/2015 17:07:41 · Announcement #40040 · View on Saudi Exchange

Saudi Telecom Co. announces the interim consolidated financial results for the period ending on 30-09-2015 (Nine Months)

Element	Current quarter	Similar quarter for previous year	% Change current	Previous quarter	% Change previous
Net profit (loss)	2,322	3,372	-	2,558	-
Gross profit (loss)	7,624	7,621	0.04	7,164	6.42
Operational profit (loss)	3,038	3,540	-	2,963	2.53
All figures are in (Millions) Saudi Arabia, Riyals

Element	Current period	Similar period for previous year	% Change
Net profit (loss)	7,384	8,566	-
Gross profit (loss)	22,332	20,856	7.08
Operational profit (loss)	9,381	9,167	2.33
Earning or loss per share, Riyals	3.69	4.28	-
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 decreased by SR 1,050m compared to the comparable quarter in the previous year, mainly due to the following: 1. The SR 1,137m increase in cost of services, and the SR 505m increase in operating expenses during the 3rd quarter compared to the comparable quarter in the previous year, as a result to the SR 1,140m increase in revenue during the quarter compared to the comparable period last year 2.The SR 573m decrease in (Other income and expenses, net) during the 3rd quarter compared to the comparable period last year, mainly due to the following: a. The booking of SR 158m related to the early retirement program during the 3rd quarter, which did not exist during the same period last year b. The SR 190m increase in (Losses from investments accounted for under equity method) during the 3rd quarter compared to the same period last year, and this is attributed mainly to the significant depreciation of the Turkish Lira against the US Dollar during the 3rd quarter compared to the same period last year c. The SR 261m decrease in (Other income and expenses; other, net) compared to the same period last year, and the main reason is attributed to the following: 1) The SR 240m decrease in Miscellaneous revenue compared to the same period last year 2) The SR 91m increase in (losses on sale/disposal of property, plant and equipment) during the 3rd quarter compared to the same period last year 3) The SR 70m decrease in Miscellaneous expenses during the 3rd quarter compared to the same period last year 3.The SR 42m decrease in the provision for Zakat & Tax during the 3rd quarter compared to the same period last year
Reasons of increase (decrease) for period compared with same period last year	The net profit for the 9 months period decreased by SR 1,182m compared to the same period in the previous year, mainly due to the following: 1.The SR 1,854m increase in cost of services, and the SR 1,263m increase in operating expenses during the 9 months period compared to the same period in the previous year, as a result to the SR 3,331m increase in revenue during the 9 months period compared to the comparable period last year 2.The SR 1,409m decrease in (Other income and expenses, net) during the 9 months period compared to the same period last year, mainly due to the following: a. The booking of SR 270m related to the early retirement program during the 9 months period , which did not exist during the same period last year b. The SR 262m increase in (Losses from investments accounted for under equity method) during the 9 months period compared to the same period last year, and this is attributed mainly to the significant depreciation of the Turkish Lira against the US Dollar during the 9 months period compared to the same period last year c. The SR 103m increase in commissions compared to the same period last year d. The SR 958m decrease in (Other income and expenses; other, net) compared to the same period last year, and the main reason is attributed to the following: 1)The SR 193m decrease in Miscellaneous revenue compared to the same period last year 2)The SR 233m increase in (losses on sale/disposal of property, plant and equipment) during the 9 months period compared to the same period last year 3)The SR 532m increase in Miscellaneous expenses during the 9 months period compared to the same period last year, which includes an amount of SR 395m two-months salary expenses (one-off) booked during the 1st quarter of 2015, which was made as a gesture to follow the initiative of the Honorable Royal Decree (as previously announced) 3.The SR 98m decrease in the provision for Zakat & Tax during 9 months period compared to the same period last year
Reasons of increase (decrease) for quarter compared with previous quarter	The net profit for the 3rd quarter decreased by SR 236m compared to the immediate prior quarter, mainly due to the following: 1.The SR 213m increase in cost of services, and the SR 385m increase in operating expenses during the 3rd quarter compared to the immediate prior quarter, as a result to the SR 673m increase in revenue during the 3rd quarter compared to the immediate prior quarter 2.The SR 339m decrease in (Other income and expenses, net) during the 3rd quarter compared to the immediate prior quarter, mainly due to the following: a. The SR 47m increase in the early retirement program cost during the 3rd quarter compared to the immediate prior quarter b. The booking of SR 217m (Losses from investments accounted for under equity method) during the 3rd quarter compared to gains of SR 7m for the immediate prior quarter, and this is attributed mainly to the depreciation of the Turkish Lira against the US Dollar during the 3rd quarter compared to the immediate prior quarter c. The SR 64m increase in finance cost during the 3rd quarter compared to the immediate prior quarter d. The SR 58m increase in commissions compared to the immediate prior quarter e. The SR 62m decrease in (Other income and expenses; other, net) compared to the immediate prior quarter
Reclassifications in quarterly financial results	Certain comparatives figures for the period ending at 30 September 2014 have been reclassified to conform with the presentation used for the period ending at 30 September 2015.
Other notes	Revenue from services for the 9 months period amounted to SR 37,590 m compared to SR 34,260 m for the corresponding period last year, an increase of 9.7 %, and for the 3rd quarter revenue from services reached 12,895m, an increase of 9.7% compared to same period last year. Earnings before interest, taxes, zakat, depreciation and amortization (EBITDA) for the 3rd Quarter amounted to SR 4,958 m compared to SR 5,410 m for the corresponding period last year, a decrease of 8.4%, and for the 9 months period, EBITDA amounted to SR 14,911 m compared to SR 14,380 m for the corresponding period last year, an increase of 3.7%. Commenting on the results, STC Group CEO, Dr. Khaled H. Biyari, stated: (The 10% increase in Consolidated revenue and the 3.7% increase in EBITDA for the 9 months period compared to the same period last year, confirms that STC strategy is working well. While, the decline in Net Profit for the 9 months period is mainly attributed to STC investments in programs that will have positive outcomes in the near future, such as Early retirement program and the disposal of old assets. Also, due to the FX losses (non-operating and non-cash) related to the significant depreciation of the Turkish Lira against the US Dollar during the 9 months period compared to the same period last year. I assure, that STC will continue to invest in infrastructure, advanced networks and new technologies which will enable us to reach new levels of customers' satisfaction and enrich our customers experience. Currently, the Telecom sector is going through a major transformation phase, and the conversations that are taking place are about integrated ICT providers, Cloud computing, Internet of Things, and other hot topics. STC's strategy will enable us to lead this transformation phase, and to re-positioned the company in order to accommodate and address all variables and developments for the purpose of meeting our customer's aspirations. We have been executing an ambitious transformation strategy designed to empower STC in order to compete in this new environment and to operate as an efficient ICT provider at a world-class standard and to deliver on its distinguished role for the nation.) With regards to international operations, the 9 months period witnessed revenue growth of 9% in the controlled international subsidiaries compared to same period last year, and this is attributed mainly to the continued growth in controlled subsidiaries customer base and market shares. Domestically, the 9 months period witnessed revenue growth of 10% from domestic operations compared to same period last year, as a result to the growth in all sectors revenues. STC continues with the introduction of innovative mobile services and customized offers with the appropriate smart phones that encourages mobile usage for both post-paid and pre-paid (SAWA) customers, which resulted in 5% increase in mobile working lines during the 3rd quarter compared to the same period last year, and an increase of 0.5% compared to the immediate previous quarter. This is underpinned by the Companys' customer-centric approach and its efforts to enhance the overall customers experience. Also, the 3rd quarter witnessed continuous strong growth in data traffic over the 4G network. This is mainly attributed to the company's continuous deployment of the 4G network and the availability of the smart phones that support 4G technology. STC's continues with the deployment of the fiber optic network for both business and residential. During the 3rd quarter, FTTH Customer base increased 21% compared to the same period last year, and 6% compared to the immediate previous quarter. Enterprise business unit overall revenues increased approximately 14% during the 3rd quarter compared to the same period last year, driven mainly by the 19% increase in Business sector data services revenues compared to same period last year.

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