MyAdhan Blog

Link: Saudi Arabia: Mobily profit grows 30% to $86.9 million

Etihad Etisalat (Mobily) posted a 30 per cent rise in first-quarter profit on growth of its mobile phone business, but missed all analysts’ forecasts as it braces for greater competition in Saudi Arabia. Mobily made 326 million riyals ($86.9m), or 0.65 riyals per share, in the three months ended on March 31, compared with 251m riyals, or 0.5 riyals per share, a year earlier. That was the smallest gain in quarterly profit since the firm started operations in 2005. First-quarter profit missed four forecasts of analysts in a Reuters net profit survey last month that ranged from 335.1m to 529m riyals. Revenue rose 23pc to 2.31 billion riyals - also the smallest rise since its inception - while operating profit grew 17pc to 371m riyals. Profit growth resulted from “putting the emphasis on developing mobile phone services inside the kingdom, increasing the sales outlets and developing customer service,” Mobily said. Mobily shares were unchanged on Wednesday, the last trading day, at 60.5 riyals, 33pc below a 91.4-riyal price target set by HSBC in February. HSBC had raised its target price from 81.3 riyals, citing the contribution from broadband internet services, even though it said over all subscriber growth appeared slower than expected. Mobily competes with incumbent Saudi Telecom Company, the largest Arab telecom firm by market value, for mobile phone users in the kingdom. Zain Saudi Arabia, an affiliate of Kuwait’s Mobile Telecommunications Company (Zain), plans to start operations this year after selling shares to the public in the first quarter. Mobily, which did not release subscriber numbers, claims a 39pc market share with 11.1m subscribers, its chief executive officer Khaled Al Kaf said. Mobile phone penetration in the largest Arab economy probably exceeds 100pc. Saudi mobile phone operators may be generating 55bn riyals in revenue in 2010, 38pc more than 2006, the kingdom’s telecom ministry said. Mobily’s stock has fallen almost 18pc this year, underperforming the index, which is down about 13pc. Emirates Telecommunications Corporation owns 26.25pc in Mobily, having sold an 8.74pc stake in the firm at 55 riyals per share this year.