SR 1.55 bn Q1 profit for STC as mobile customer base grows

Saudi Telecom Co. (STC) reported a 38.5 percent year-on-year plunge in first-quarter net profit, after taking charges relating to an affiliate in India.
The firm made a net profit of SR 1.55 billion in the three months to March 31, down from SR 2.52 billion a year earlier.
STC’s total domestic mobile customer (postpaid and prepaid) increased 4 percent compared to the same period last year.
The company announced the interim consolidated financial results for the three-month period ending at March 31 in a statement to Tadawul.
The company said in a separate statement, also posted on the website of the Saudi stock market, that it would distribute first-quarter dividends of SR 0.5 per share.
The net income during the first quarter is an increase of 231 percent compared to SR 468 million for the immediately prior quarter,
The gross profit for the first quarter amounted to SR 6,494 million compared to SR 6,329 million for the corresponding quarter last year with an increase of 2.6 percent.
The operating income for the first quarter amounted to SR 2,218 million compared to SR 2,675 million for the corresponding quarter last year with a decrease of 17 percent.
The basic earnings per share for the first quarter amounted to SR 0.77 compared to SR 1.26 for the corresponding period last year.
The decrease in net income for the first quarter of 2013 compared to the same quarter last year (despite the 2.6 percent increase in gross profit and the improvement in operations efficiency), is attributed to the booking of non-cash charge of SR 500 million provision from impairment of intangible assets related to Aircel, India during the first quarter.
The increase in net income for the 1st quarter of 2013 compared to the immediate prior quarter is attributed to the booking of SR 640 million provisions from impairment of intangible assets and SR 544 million deferred taxes charge during the fourth quarter of 2012.
Earnings before interest, taxes, zakat, depreciation and amortization (EBITDA) for the first quarter amounted to SR 3,834 million compared to SR 4,228 million for the corresponding quarter last year with a decrease of 9 percent
Revenue from services for the first quarter amounted to SR 11,474 million compared to SR 11,067 million for the corresponding quarter last year, with an increase of 3.7 percent.
The financial numbers for the first quarter of 2012 were shown as per the equity method instead of the previously used proportionate consolidation method in order to be comparable with the new method used for Q1, 2013.
Commenting on the results, Abdulaziz Al-Sugair, STC Group chairman and managing director, said: The financial results for the first quarter of 2013 were overall good despite the provision resulting from the impairment of intangible assets in Aircel, India, booked during the quarter and will set the foundation to lead the group to a new era of achievements.”
He said: “We have continued to further strengthen our position as one of the largest and most technologically advanced telecom operators both in our domestic market as well as in international markets.”
He added: “STC group has succeeded in remaining at the forefront of the telecommunications and information technology sectors in the Middle East and beyond, by optimizing operations and leveraging our expertise and our strength in providing our customers with the latest technologies and services with key focus on customer experience.”
The chairman said: “We see significant growth potential both domestically and internationally, and we believe that our strong market position and expanding presence in the Kingdom of Saudi Arabia and key growth markets ensures that we are well placed to leverage growth opportunities both in the domestic and international markets. As a result, we are confident that we can deliver significant value to our shareholders in the future.”
Domestically, STC continues the introduction of innovative and value added services that encourage mobile usage, and targeted packages bundled with advanced smartphones.
This is underpinned by the company’s customer-centric approach and its efforts to enhance the overall customers experience. These efforts are producing results. STC’s total domestic mobile customer (postpaid and prepaid) increased 4 percent compared to same period last year.
STC previously announced on 20.10.2012 in Tadawul with the announcement for Q3, 2012 financial results, that starting from Q1, 2013, STC will start reporting the financial results using the equity method instead of the proportionate consolidation method previously used.
This comes in compliance with the IASP release of the IFRS 11 for accounting for joint arrangements and that equity accounting must be used starting from January 2013.