STC’s H113 results hit hard by international operations and FX losses

Saudi Telecom Company (STC) today announced the company’s preliminary financial results for the period ending June 30, 2013 (6 months)

Net profit for H113 amounted to SAR 2.98 billion (US$795 million) down 40 per cent year-on-year. For Q213 net profit was down 41 per cent year-on-year to SAR 1.43 billion, and down eight per cent quarter-on-quarter. STC attributed the decrease in net profit for H113 to the booking of a one-time, non-recurring and non-cash charge of SAR1.1 billion resulting from fair valuation of its investments in Asia (Aircel and Axis) and unrealised foreign exchange losses of SAR601 million due to the sharp depreciation of Turkish lira , Indian rupee and Indonesian rupiah. Impacting the results was also the disposal of fixed assets with a net book value of SAR 277 million during Q1.

Other key performance indicators included:

· Revenues for H113 reached SAR22.08 billion, an increase of four per cent year-on-year

· Gross profit for H113 increased four per cent year-on-year to SAR 13.23 billion

· EBITDA for H113 amounted to SAR 7.94 billion, down six per cent year-on-year

· Wireless broadband revenue during Q213 grew 29 per cent year-on-year

· Mobile broadband customers during the quarter increased 40 per cent

· Fixed broadband customers during the quarter increased 11 per cent

Revenues from domestic operations during H113 increased five per cent as a result of the growth in business sector and broadband (fixed & wireless) services revenues. H113 also experienced revenue growth of 22 per cent in the controlled subsidiaries year-on-year, which led to the overall increase of four per cent in STC Group consolidated revenue for the period.

STC stated that currently management is evaluating options for some of its international investments in order to take appropriate actions in the best interest of shareholders.

With regards to international operations, STC Group continues to grow the operations of subsidiaries and affiliate companies, with the operator’s overall subscriber base having exceeded 175 million as of Q213. During the quarter the group witnessed revenue growth of 22 per cent in the controlled subsidiaries, though operating profit and net profit were impacted negatively by the following:

· The operational performance of Axis, Indonesia and Binariang Group (mainly due to Aircel) continued to drag the financial results of the group

· The unrealised foreign currency exchange losses during H113 amounting to SAR601 million related to Oger Telecom and Axis resulting from the significant depreciation in the Turkish & Indonesian rupiah against US dollar during the period

· Booking of one-time, non-recurring and non-cash charge of SAR 1.1 billion losses from fair valuation of investments in Asia (Aircel and Axis)