RIYADH, 22 April 2007 — Etihad Etisalat (Mobily), Saudi Arabia’s second mobile phone operator, posted a nearly seven-fold jump in first-quarter profit on high subscriber growth, but still fell short of analyst forecasts.
Mobily made SR251 million ($66.9 million), or 0.5 riyals per share, in the three months to March 31, up 578.4 percent from the year-earlier period, it said in a statement on the Saudi bourse website.
Mobily’s net profit was SR37 million, or 0.075 riyals per share, in the first quarter of 2006, it said.
Growth in subscribers drove a 66.4 percent jump in revenues to SR1.88 billion, from SR1.13 billion a year earlier.
Mobily had 6.2 million subscribers at the end of March, compared with 5.5 million at the end of December, said Hamoud Al-Ghobaini, Mobily’s corporate communications manager.
The number of subscribers grew 121 percent over the year-earlier period, when Mobily had 2.8 million users, Ghobaini said.
Still, the profit growth was below the average 1,086 percent rise analysts had forecast in a Reuters net profit survey last month.
Analysts were expecting Mobily’s profit would range between SR348 million and SR505.6 million in the quarter after the company made SR330 million in the fourth quarter.
But fourth-quarter profits were exceptional due to the five-day Haj pilgrimage that ended on Jan. 1, Ghobaini said.
Mobily, which ended the mobile phone monopoly of Saudi Telecom Co. in 2005, got SR30-SR40 million of net profit from the Haj, which attracted around two million Muslims, he said.
“One should have expected our first-quarter net profit to be below the fourth quarter’s since we had exceptional activity then due to the Haj and the religious celebrations,” he said.
Shares of Mobily fell 2.37 percent after the news.
The company also failed to match analyst forecasts because of its aggressive pricing policy, said Ibrahim Al-Alwan, deputy chief executive of KSB Capital Group.
“The results are very disappointing compared to profit forecasts, but in terms of revenue growth they are very good,” Alwan said.
“The most important thing for Mobily should be winning market share regardless of profitability.”
Mobily was able to capture 30 percent of Saudi Arabia’s mobile phone market within 18 months of starting operations.
Last week, Saudi Telecom posted its smallest quarterly profit in more than two years as competition eroded the former monopoly operator’s margins.
Mobily, whose bid for the second Saudi fixed-line license was disqualified this month, borrowed $2.8 billion in March in the largest-ever syndicated Islamic loan to fund expansion of operations and infrastructure.
