[ Qatar Telecom (Qtel) ]
is winning plaudits as it fares better than expectations amid difficult trading conditions and its ambitious growth plans start to take shape.
The former Qatari telecommunications monopolist reported a 12.2 per cent dip in net income for the first quarter to 711.43 million Qatari rials but that nevertheless beat earnings forecasts for the stock.
The company's income for the same period a year earlier was flattered because of gains on an earlier acquisition. More encouragingly, revenues increased 7.6 per cent to 8 billion rials.
That has led Qtel to set its forecasts for the year ahead at the top end of market expectations.
"On the back of Qtel's confident results call and its encouraging guidance, we reiterate our overweight [rating] on Qtel," analysts from JPMorgan wrote in a research note, giving the company a target price of 131 rials per share.
The bank noted Qtel recorded good performance in all segments of its domestic operations, while operations in Iraq and Algeria had grown strongly.
"Qtel discloses its full-year 2012 guidance of revenue growth of 4 to 9 per cent year-on-year and Ebitda [earnings before interest, taxes, depreciation and amortization] growth of 3 to 8 per cent year-on-year," the report said. "We are encouraged by the upper end of the guidance being 1 to 2 per cent higher than our current forecast, which is already ahead of Bloomberg consensus."
Qtel's shares have risen 27.5 per cent so far this year to 120.30 rials each. They fell 2.4 per cent in trading yesterday after a rights issue, increasing the number of shares by 40 per cent.
But that could be a buying opportunity, as the rights issue ought to help the company's growth plans, wrote analysts at NBK Capital in a research note.
"We view the rights issue positively as it will help improve Qtel's capital structure (2.1 times debt-to-equity as of March), support the operator's future mergers and acquisitions strategy, and also enhance the stock's liquidity," the report said.
The bank rates Qtel a "hold" with 4 per cent upside.
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