The company, an affiliate of UAE's Etisalat, made a net profit of SR1.22 billion, compared with a profit of SR1.14 billion in the same period a year ago. 

Analysts polled by Reuters on average expected the firm to post a quarterly profit of SR1.35 billion.

Mobily, which unveiled its long-term evolution (LTE) high-speed network in September, said revenues were SR4.6 billion in the quarter, up from SR3.99 billion a year earlier, but down from SR5.1 billion in the second quarter of 2011.  

"The company reduced its sales of low-margin smart phones in the third quarter," Mobily said in a statement to the Saudi bourse.

Mobily's EBITDA (earnings before interest, tax, depreciation and amortization) margin rose to 39 percent in the third-quarter, up from 34 percent in the preceding three months, but competition in data services and international calling is increasing, it said.  

"In addition, the company's sales of iPhone 4, in particular, declined with customers' anticipation of the new version of the device," it added. 

Mobily and other Gulf operators are trying to persuade customers to upgrade to smart phones and subscribe to data tariffs in an attempt to offset falling voice margins.  

Mobily's data revenue rose 7 percent quarter-on-quarter, with mobile broadband subscribers exceeding 6.3 million by quarter-end, it added.  

The operator's shares ended flat before the results were announced, to be down 1.4 percent in 2011.