STC reports 29 percent net profit growth

Strong domestic results across all business lines, resulting from focus on customer-centric advanced services and growth in international operations

Saudi Telecom Company (STC) today announced the company’s preliminary consolidated financial results for the periodending at 30June 2012 (6 months).

•    Revenues for the 6 months reached SR 29,233m with an increase of8.4% compared to same period last year
•    Net Income for the 6 months reached SR 4,929m with an increase of 29% compared to same period last year
•    EBITDA for the 6 months grew by 8.5% compared to same period last year
•    Earnings per share for the 6 months reached SR 2.46 compared to SR 1.92 for the corresponding period last year.
•    Wireless broadband customers in Q2, 2012 grew by more than 200% compared to Q2, 2011

STC continues the positive start to 2012 through delivering strong revenue growth domestically and internationally. For Q2 2012, the Company reported a 5% increase in consolidated revenues which reached SR 14,555 million compared to SR 13,880 million in Q2 2011. As a result to the increase in revenues from all services & the overall enhancement in the operations efficiency, Operating profit for the 2nd quarter increased by 13.5% to reach SR 3,158 million compared to SR 2,783 million for the same period in 2011. For the 6 months ending June 2012, operating Income increased by 16.2% reaching SR 6,335 million. Earnings before interest, Zakat and taxes, depreciation and amortization (EBITDA) for Q2 2012 increased 5.6% compared to same period last year.

STC reported a 7% increase in net Income for Q2 2012 to reach SR 2,408 million compared to Q2 2011, and reached SR 4,929 million for the 6 months period with an increase of 29% compared to the same period last year. The increase in net  income for the quarter comparing with the corresponding quarter last year, is attributed to the increase in operating revenue which came as a result of the growth in Broadband (fixed & mobile), Business sector services and wholesales services revenues domestically and the overall growth in revenues from international operations. In addition, the overall improvements in operations efficiency have contributed to this increase.  While net income decrease by 4.5% compared to the previous quarter is attributed to the booking of early retirement program cost of SR 269 million during the 2nd quarter 2012.

The continued strong company performance and commitment to delivering shareholder value has lead the Board of Directors to approve the distribution of a total of SR 1,000 million in cash dividend for Q2 2012, representing SR 0.5 per share.

Commenting on the results, STC Group CEO, Dr. Khaled A. Alghoneim, said: “The second quarter witnessed continued growth for STC.  We attracted more customers in mobile, broadband (fixed & mobile), and fiber to the home, also we have increased wholesales and business sectors sales. This is mainly, due to the pipeline of fresh, targeted services that we are consistently delivering, combined with our focus on providing an integrated experience and tailored, high-quality, customer service. We will continue with our ongoing efforts to remain customer-centric, which is clearly delivering results. This is a position we intend to maintain, by striving to lead through investing in technology and innovative solutions across fixed, mobile and data products, and by exceeding our customers’ expectations so that together, we can reach new horizons. Also, We continue to drive intra-company cooperation, which will deliver additional performance improvements during the upcoming Ramadan & Hajj seasons, both in our domestic and international businesses, through collaborative marketing campaigns capitalizing on the group synergies. We seek to be recognized as a catalyst for technological, economic and social development, we believe this will enable us to generate incremental value to our shareholders.”
Locally, Q2 2012 saw STC continue to perform well, with mobile postpaid customers increasing by 3% compared to Q1 2012. This can be attributed to the Company’s continued focus on improving the customer experience, ongoing introduction of innovative services and bundles, such as the flexible ‘ALJAWAL Keys’, which enrich the customer’s experience by introducing the details of the monthly bill online through the “STC Online” portal and the ability to view call statistics graphs. In addition, we introduced free [Arabic] applications that can be used on the smart devices, and continued with the development of STC’s customers retention programs.
Wireless broadband revenues grew by 88% during the 2nd quarter compared to Q2 2011. This can be attributed to increased 3G & 4G coverage which lead to the over 200% growth in the number of wireless broadband customers in Q2 2012 compared to same period last year. Further introduction of new products for Internet customers through the Company’s QUICKnet packages and advanced smart phones allowed us to increase users by 58% in Q2 2012 compared to Q1 2012.

With regards to the home and business sectors, The number of fiber to the home and to the business (“FTTH & FTTB”) customers increased over 800% in Q2 2012 compared to Q2 2011. As of 30 June 2012 there were 65,000 connected customers (homes & Businesses). This growth follows our objective of continued expansion of STC’s Fiber optic network to reach 500,000 home pass by December 2012 and to reach 1,500,000 home pass by December 2014.As a result to this expansion, the number of “InVISION” subscribers (STC’s Interactive TV service) increased over 400%% in Q2 2012 compared to Q2 2011.

The Company grew its fixed broadband customer base by 18% in Q2 2012 compared to Q2 2011. The number Bundles services customers also continued to grow by 28% Q2 2012 compared to Q2 2011.

With regards to the business sector, Data circuits sales to the businesses grew by 54% in Q2 2012 compared to the same period last year. Internet Bandwidth usage increased by 63% during Q2 compared to same period last year. In addition, JAWAL Aamal sales increased by 42% in Q2 compared to same period last year, and a new QuikNetAamal service was introduced during the quarter. STC signed several agreements during the quarter with important government ministries & agencies and business from the private sector, like, ministry of Health, ministry of education, General authority of civil aviation and Saudi post which should allow us to sustain the growth in the business sector.

With regards to international operations, STC group in Q2 2012 witnessed revenue growth of 57% in the controlled subsidiaries compared to Q2 2011 driven by continued subscriber additions in post-paid, pre-paid and wireless broadband.  STC continues to expand its networks in India, Indonesia and South Africa, with the aim of attracting more customers, increasing market share and increasing revenues. Moreover, our affiliate companies VIVA Kuwait & VIVA Bahrain and Integral turned around to profit on the net income level during the 2nd quarter. This is a huge achievement and in record time as VIVA Kuwait & VIVA Bahrain started in these markets as a third operators and showcases STC’s ability to integrate and extract synergies from these operations.