Profits up for Saudi telecoms

Greater broadband use boosts second-quarter profits for Saudi Telecom Company and Mobily.

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Greater demand for broadband services led to a bumper second quarter for Saudi Arabia's largest telecommunications operators, Saudi Telecom Company and Mobily.

The higher profits resulted from the greater use of the internet at home and via mobile, the companies said.

Only 41 per cent of the Saudi population uses the internet, compared with 78 per cent in the UAE, according to the International Telecommunication Union. Smartphone penetration in the country is estimated at just 11 per cent, according to Mobily.

But increasing demand for home broadband and web-enabled smartphones is driving growth in the telecoms sector.

Saudi Telecom, or STC, the largest telecoms company in the country, attributed its higher revenue to an increase in the number of broadband customers in its domestic market.

The company's second-quarter net income rose to 2.25 billion riyals (Dh2.2bn), 9 per cent more than for the same period last year, STC said yesterday in a statement to the Saudi bourse.

Second-quarter profitwas 43 per cent higher than in the first quarter, when the company reported net income of 1.57bn riyals.

Simon Simonian, a telecoms analyst at Shuaa Capital, said the results were a sign of "robust" growth in Saudi Arabia's telecoms industry.

"For STC, it was a positive surprise, specifically for the domestic market," he said. "As number one, it was being challenged in the last few quarters."

STC's growing international operations in markets such as Indonesia, Turkey and India also contributed to the increase in profit, the company said. STC derives 34 per cent of its revenue from outside Saudi Arabia, and executives have said it expects to raise its external revenue to 50 per cent of overall income by 2014.

Mobily, the second-largest telecoms company in the kingdom, reported net income of 1.16bn riyals in the second quarter, 29 per cent more than in the same period last year.

Revenue from mobile data services now accounts for 20 per cent of the company's total revenue, up from 17 per cent for the first half of last year, Mobily said.