Saudi Telecom reports 39% fall in first-quarter net income

Saudi Telecom has reported a 38.5% fall in first-quarter net income, to SAR1.55 billion ($413 million), due largely to a SAR500 million impairment charge against its investment in Indian operator Aircel.

Despite the bottom-line setback, the state-backed incumbent reported a 3.7% increase in revenues, to SAR11.47 billion, and said efficiency improvements had helped to bolster gross profits by 2.6%, to SAR6.49 billion.

Saudi Telecom has reported a 38.5% fall in first-quarter net income, to SAR1.55 billion ($413 million), due largely to a SAR500 million impairment charge against its investment in Indian operator Aircel.

Despite the bottom-line setback, the state-backed incumbent reported a 3.7% increase in revenues, to SAR11.47 billion, and said efficiency improvements had helped to bolster gross profits by 2.6%, to SAR6.49 billion.

In a statement posted on the website of the Saudi bourse, the operator said its domestic mobile customer base grew by 4% in the first quarter, compared with the same period last year, but reported a 69% increase in the number of mobile broadband customers it serves, with mobile broadband revenues up 32%.

Much of that success was attributed to the ongoing rollout of 3G and 4G networks, with the latter now reaching more than 5,000 sites across the country.

In the fixed-line area, Saudi Telecom (Riyadh, Saudi Arabia) said its number of fixed broadband subscribers rose by 15%, reporting strong interest in its fiber-optic and TV services.

Internationally, the operator now claims to serve more than 170 million customers, with first-quarter revenues up 23% at its “controlled subsidiaries” compared with the same period last year.

Besides Aircel (Chennai, India), Saudi Telecom also holds stakes in Cell C (Morningside, South Africa), the third-biggest mobile operator in South Africa, and Indonesian operator Axis (Jakarta, Indonesia).

“The financial results for the 1st 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,” said STC Group chairman and managing director Abdulaziz Al-Sugair.

“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,” he added.

The company has been through lots of changes in the past 12 months, with chief executive Khaled Alghoneim resigning last month, just weeks after the departure of Jameel Abdullah al-Molhem, the former chief executive of the domestic business.

Those departures followed the resignations last year of Group chief executive Saud al-Daweesh and international chief executive Ghassan Hasbani.