But the telecoms operator posted a net loss for the first nine months of this year
Zain Saudi's third-quarter net income up 15-fold as revenues rise
Zain Saudi Arabia, the telecoms company in which Kuwait's Zain Group has a 37 per cent stake, reported a 15-fold profit rise, surprising the market, as revenues jumped and demand for its services rose.
Net profit for the three months to September 30 surged to 48 million riyals (Dh47m) from 3m riyals reported a year earlier, the company said on Monday in a bourse filing to the Saudi stock exchange, where its shares are traded. Revenues climbed 8 per cent year-on-year to 1.95 billion riyals, it added.
Analysts polled by Bloomberg on average estimated Zain Saudi to post a third quarter loss of 37.3m riyals.
“Increase in revenues by 8 per cent amounting 145m [riyals] generated from increasing demand for the company’s products and services which has reflected in an increase of 106m [riyals] in the gross profit,” Zain said in the bourse filing.
The company reported an increase of 21m riyals in other income following the “finalisation of the Universal Service Fund granted from the government”, it added.
Zain Saudi, the kingdom's third biggest telecom operator, has struggled to compete with incumbents Saudi Telecom Company and Mobily since its 2008 launch. The company failed to maintain profitability in the second quarter as revenues slumped and costs climbed. It swung to a net loss of 38m riyals in the three-month period to June from a profit of 8m riyals in the second quarter of 2017, it said in a bourse filing at the time.
Telecom operators in the Saudi market are facing increased pressure after Riyadh imposed 5 per cent VAT at the beginning of this year, which has affected consumer spending. The regulatory changes in the market such as removal of restrictions on voice over internet protocol has also put pressure on their revenues from international calls.
Despite improved profitability in the third quarter, the company swung to a net loss for the January to September period.
Zain said its loss for the first nine months came in at 67m riyals, compared to a profit of 57m riyals for the same period in 2017.