Saudi Telecom Co. — Interim / Quarterly Report 2016

Apr 19, 2016

Saudi Telecom Co. announces the interim consolidated financial results for the period ending on 31-03-2016 (Three Months)

7010 · 19/04/2016 16:24:56 · Announcement #42216 · View on Saudi Exchange

Saudi Telecom Co. announces the interim consolidated financial results for the period ending on 31-03-2016 (Three Months)

Element	Current quarter	Similar quarter for previous year	% Change current	Previous quarter	% Change previous
Net profit (loss)	2,375	2,504	-	1,950	21.79
Gross profit (loss)	7,221	7,544	-	8,011	-
Operational profit (loss)	3,004	3,380	-	2,554	17.62
Earning or loss per share, Riyals	1.19	1.25	-	-	-
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 1st quarter decreased by SR 128m compared to the comparable quarter in the previous year mainly due to the following: 1. The SR 323 m decrease in gross profit during the 1st quarter compared to the comparable quarter in the previous year (despite the SR 285m increase in revenues from services during the quarter compared to the comparable quarter in the previous year) as a result to the 12.3% increase in cost of services during the quarter compared to the comparable quarter in the previous year. 2. The SR 53m increase in operating expenses during the 1st quarter compared to the comparable quarter in the previous year, mainly due to the following: - The SR 155m increase in general & administrative expenses during the 1st quarter compared to the same period last year. - The SR 177m increase in depreciation and amortization during the 1st quarter compared to the same period last year. - The SR 280m decrease in selling & marketing expenses during the 1st quarter compared to the same period last year 3. The SR 192m decrease in (Other income and expenses, net) during the 1st quarter compared to the comparable period last year, mainly due to the following: - The comparable figures for the 1st quarter of 2015 include the following: a) An amount of SR 395m two-months salary expenses (one-off) paid to Saudi employees which was made as a gesture to follow the initiative of the Honorable Royal Decree (as previously announced). b) An amount of SR 136m (losses on sale/disposal of property, plant and equipment) during the same quarter. - The booking of SR 38m related to the early retirement program during the 1st quarter, which did not exist during the same period last year - The booking SR 28m gains from investments accounted for under equity method during the 1st quarter compared to losses of SR 145m for the same period last year - The SR 7m decrease in finance cost during the 1st quarter compared to the same period last year - The SR 68m increase in commissions during the 1st quarter compared to the same period last year 4. The SR 29m increase in the provision for Zakat & Tax during the 1st quarter compared to the same period last year.
Reasons of increase (decrease) for quarter compared with previous quarter	The Net Profit for the 1st quarter increased by SR 425m compared to the immediate prior quarter (despite the SR 789m decrease in gross profit during the 1st quarter compared to the immediate prior quarter as a result to the 3.7% decrease in revenue and the 5.8% increase in cost of services), this is attributed mainly to the following: 1- The SR 1,240m decrease in operating expenses during the quarter compared to the immediate prior quarter, and this is attributed to the following: - The SR 1,035m decrease in selling & marketing expenses during the 1st quarter compared to the immediate prior quarter - The SR 258m decrease in general & administrative expenses during the 1st quarter compared to the immediate prior quarter - The SR 53m increase in depreciation and amortization during the 1st quarter compared to the immediate prior quarter 2- The SR 57m increase in (Other income and expenses, net) during the 1st quarter compared to the immediate prior quarter, mainly due to the following: - The SR 97m decrease in the early retirement program cost during the 1st quarter compared to the immediate prior quarter - The booking of SR 28m (gains from investments accounted for under equity method) during the 1st quarter compared to losses of SR 24m for the immediate prior quarter, and this is attributed mainly to the decline in foreign currency losses related to Oger Tel. during the 1st quarter compared to the immediate prior quarter - The SR 10m decrease in finance cost during the 1st quarter compared to the immediate prior quarter - The SR 50m increase in commissions compared to the immediate prior quarter - The SR 266m increase 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 31 March 2015 have been reclassified to conform with the presentation used for the period ending at 31 March 2016.
Other notes	Revenue from services for the 1st quarter amounted to SR 12,759 million compared to SR 12,473 million for the corresponding period last year, an increase of 2.3 %. Earnings before interest, taxes, zakat, depreciation and amortization (EBITDA) for the 1st quarter amounted to SR 4,962 million compared to SR 5,160 million for the corresponding quarter last year, a decrease of 3.8%. Commenting on the results, STC Group CEO, Dr. Khaled H. Biyari, stated: (The financial results achieved for the 1st quarter of 2016 reflects the efforts being made to constantly evolve, improve and develop the company strategy and operations both domestically and internationally. Revenues from services increased 2.3% during the 1st quarter compared to the comparable period last year. We will continue to invest in our employees, focus more on customer satisfaction and enrich their experience as part of STC strategy, by deploying cutting-edge technological resources, and investing in technology & innovative solutions that shall enable the Saudi society to elevate to new horizons in the new telecom world. This will be in parallel with the country's transformation program which support the expansion in the new digital economy, and will enable speedy processing of all transactions, which will be more convenient for the society and contribute to improving the overall productivity. In light of the increasing importance of Telecom and technology, STC will continue to adopt initiatives to invest in unconventional telecom infrastructure through investments in networks and associated systems in order to allow smooth transformation to provide highly secured cloud computing services. All this will happen through long term productive partnerships with government institutions which will create an environment that shall encourage investments and eventually serve the end user and society in the light of increasing importance of information technology and Telecom.) With regards to international operations, the 1st quarter witnessed revenue growth of 3.7% in the controlled international subsidiaries compared to same period last year. Domestically, the 1st quarter witnessed revenue growth of 2.9% from domestic operations compared to same period last year. As STC continues with the introduction of innovative services and customized offers that encourage mobile usage for both post-paid and pre-paid (SAWA) customers. STC's continues with the deployment of the fiber optic network for both business and residential. During the 1st quarter, FTTH Customer base increased 39.5% compared to the same period last year, and 10.4% compared to the immediate previous quarter. In addition, Fixed broadband customer base increased 17.5% compared to the same period last year, and 2.3% compared to the immediate previous quarter. Enterprise business unit overall revenues increased approximately 17% during the 1st quarter compared to the same period last year, driven by the increase in Business sector data services revenues and associated services during the quarter.

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