STC yesterday reported a 62 per cent plummet in fourth-quarter profit, blaming it on foreign currency fluctuations. Profit during the quarter amounted to SR1.17 billion (U$311 million) in the three months to end-December, down from SR3.06 billion recorded for the same period a year earlier. 
“The drop in the fourth-quarter net profit … stemmed from currency differentials in the company’s investments abroad,” a STC statement read. It estimated the cost of currency fluctuations at SR2 billion.
STC has made investments in Maxis Group of Malaysia, Oger Telecom, and Viva, the third mobile operator in Kuwait, expanding the Saudi telco’s coverage area to include Turkey, India, Malaysia, Indonesia, Kuwait and South Africa.
“I’m not convinced with this explanation of the FX (foreign exchange) effect having such a significant impact on STC’s profitability in the fourth quarter,” commented a research analyst at Dubai International Financial Centre, speaking to Comm. “I looked at the currency fluctuations of the Indian rupee and the Malaysian ringgit, and in some cases currencies appreciated during the fourth quarter, so it puzzles me for STC to have been impacted so adversely by fluctuations,” he added.
In contrast, second placed Saudi mobile operator Mobily exceeded analysts’ expectations for Q4, recording a profit of SR778 million for the three months to end-December. This represented a year-on-year rise of 51 per cent. Mobily attributes the increase in 2008 earnings to an increase in customer numbers, minutes of communication and increasing demand of broadband services.
Full-year net profit at Mobily grew almost by the same rate to SAR2.09 billion from SAR1.38 billion in 2007, while full-year total revenues soared 30 per cent to SAR10.79 billion.
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