Investors are expected to punish STC's shares when the Saudi bourse reopens on Saturday.  

Yet it outperformed Etihad Etisalat (Mobily) and Zain Saudi in the quarter, according to Asim Bukhtiar, Riyad Capital's head of research, with the other two operators' profits also missing estimates.

"Saudi investors do react to headline numbers but, once the market digests the details, STC's share price should stabilize — subscriber numbers continue to grow and it is doing well domestically in terms of EBITDA margins and operating income," he said.  

"Zain Saudi's growth decelerated quite rapidly, Mobily's quarter-on-quarter data growth was much weaker than expected, while for STC, its profit drop was more of an earnings issue than a revenue issue." 

The former monopoly made a net profit of SR1.56 billion ($416 million), down from SR3.3 billion in the same period a year ago, it said in a statement on Saudi Arabia's bourse website. 

Analysts polled by Reuters on average expected the firm to post a quarterly profit of SR2.47 billion.

STC said it made foreign exchange losses of SR780 million in the quarter and took SR134 million in provisions after a state decree saying it should pay extra pension-related costs.   

Saudi Arabia's mobile penetration ranks third in the world at 188 percent, according to the International Telecommunication Union, with the Kingdom's conservative rules restricting mixing of the sexes and spurring demand for alternative ways to communicate.  

Finnish handset maker Nokia says Saudi Arabia is in the top five countries globally for downloads, accounting for nearly one in four of these on its platforms in the Middle East and Africa. 

The three Saudi operators are betting on data demand to offset slumping voice margins, and Mobily halved some BlackBerry tariffs in the third quarter.  

"STC's shares had been discounted because Mobily was seen as a tough competitor and winning subscribers at the expense of STC, but in the past two quarters this trend has reversed," added Bukhtiar.      

STC, which owns 35 percent of Turkey's Oger Telecom, licenses in Bahrain and Kuwait and a controlling stake in Indonesian firm Axis, said revenue was SR14 billion in the quarter, up from SR13.2 billion a year earlier.  

Subsidiary and affiliate companies provided 34 percent of group revenue, STC said, without stating whether this was for the third quarter or the nine months to the end of September. 

In a separate statement, STC said it will pay a dividend of 0.5 riyals per share for the third quarter. 

The operator's shares closed 0.3 percent lower on Saudi Arabia's bourse before the results were announced.