Saudi Telecom shares plunge after profits blow [Gulf, The (Bahrain)]
(Gulf, The (Bahrain) Via Acquire Media NewsEdge) SAUDI TELECOM Company (STC) shares dropped to a seven-week low after the former monopoly reported a 79 per cent fall in fourth quarter profits due to rising costs and one-off charges at its Indian and South African affiliates.State-owned STC, with operations spanning much of the Muslim world from Indonesia to Turkey, appointed a new chief executive last year to help focus more on its domestic market, which has become more competitive.The Saudi market, which accounts for about two-thirds of STC's sales, has opened up to other players including Etisalat affiliate Mobily in 2005 and Zain Saudi in 2008.STC has responded after a 40 per cent fall in annual profit from 2006 to 2011 by exploiting its dominant position in fixed-lines to woo customers with packages including Internet, phone and TV services.STC's results revealed net income in the three months to 31 December of SR468 million ($124.79 million), down from SR2.28 billion a year earlier.This came as a shock to analysts, who had forecast a quarterly profit of SR2.4 billion. The company's shares fell by eight per cent."The shares have taken a beating after announcing these results as there is insufficient clarity on what's going on in STC – one can't say whether the new strategy is working," said a Gulf-based telecom analyst."Recurring earnings were disappointing – costs have risen and revenue has gone down, impacting margins," said the analyst.STC took a charge of SR641 million on revaluing South African unit Cell C and SR544 million on India affiliate Binariang due to deferred taxes.STC's loss-making rival Zain Saudi, the country's No 3 mobile company, also posted below-forecast results. It reported a fourth-quarter loss of SR 443 million, which fell short of estimates.
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