Stc reports profits increase to SR3.5 bln in Q3, by 21%

The Saudi Telecom Company, stc, revealed that the net profit after zakat and tax in the third quarter increased to 3.5 billion riyals, compared to 2.9 billion riyals in the same quarter of last year, at a rate of 21.1% on September 30, 2022 (nine months).

The operational profit amounted to 4.5 billion riyals in the third quarter, compared to 3.1 billion riyals in the same quarter of the previous year, an increase of 43.3%.

The net profit after zakat and tax in the 9-month period amounted to 9.4 billion riyals, compared to 8.6 billion riyals in the same period last year, an increase of 8.2%.

The total shareholders’ equity “without minority rights” amounted to 73.3 billion riyals in the current period, compared to 68.5 billion riyals in the same period last year, a growth of 7%.

The profit per share increased to SR 1.89 in Q3 2022 from SR 1.74 in the same period a year ago.

The increase in net profit by SAR 617m in the 3rd quarter of 2022 as compared to the comparable quarter last year was mainly attributed to the following:

– The increase in revenues by SAR 732m that was offset by the decrease in cost of revenues by SAR 939m mainly due to reversal of contingent liability provision in an amount of SAR 1,079m, which led to an increase in gross profit by SAR 1,671m.

On the other side:

– Operating expenses increased by SAR 286m, mainly due to the increase in selling and marketing expenses by SAR 28m, general & administration expenses by SAR 176m and depreciation and amortization expenses by SAR 82m.

– Total other expenses increased by SAR 653m, mainly due to the booking of net share in results & impairment of investments in associates and joint ventures in an amount of SAR (776m) compared to SAR 21m, mainly as a result of recording an impairment provision related to BGSM investment in an amount of SAR (722m) compared to nil in the comparable quarter last year, due to decline in fair value as a result of the decline in market conditions and quoted share prices of key underlying investment in the Malaysian market, which led to the re-evaluation of this investment based on these factors.

– Zakat and income tax expense increased by SAR 89m.

The increase in net profit by SAR 704m in the 3rd quarter of 2022 as compared to the previous quarter was mainly attributed to the following:

– The decrease in cost of revenues by SAR 1,337m mainly due to reversal of contingent liability provision in an amount of SAR 1,079m, which led to an increase in gross profit by SAR 866m.

On the other side:

– Operating expenses slightly increased by SAR 9m.

– Total other expenses increased by SAR 157m, mainly due to:

1.The booking of net share in results & impairment of investments in associates and joint ventures in an amount of SAR (776m) compared to SAR (283m), mainly as a result of recording an impairment provision related to BGSM investment in an amount of SAR (722m) compared to SAR (298m) recorded in the previous quarter, due to decline in fair value as a result of the decline in market conditions and quoted share prices of key underlying investment in the Malaysian market, which led to the re-evaluation of this investment based on these factors.

2.On the other side, (A) Net other gains in an amount of SAR 213m, as compared to net other (losses) in an amount of SAR (25m) has been booked, mainly as a result of revaluation of STV LP fund units. (B) Net other income in an amount of SAR 22m, as compared to net other (expenses) in an amount of SAR (32m) has been booked. (c) Cost of early retirement in amount of SAR (81m) as compared to SAR (124m) has been booked.

The increase in net profit for the 9 months period of 2022 by SAR 716m as compared to the comparable period last year, was mainly attributed to the following:

– The increase in revenues by SAR 3,068m that was offset by the decrease in cost of revenues by SAR 18m mainly due to reversal of contingent liability provision in an amount of SAR 1,079m, which led to an increase in gross profit by SAR 3,086m.

On the other side:

– Operating expenses increased by SAR 890m, mainly due to the increase in general & administration expenses by SAR 622m and depreciation and amortization expenses by SAR 307m which was offset by the decrease in selling and marketing expenses by SAR 39m.

– Total other expenses increased by SAR 1,297m, mainly due to the booking of net share in results & impairment of investments in associates and joint ventures by SAR (1,288m) compared to SAR 82m, mainly as a result of recording an impairment provision related to BGSM investment in in an amount of SAR (1,259m) during the period compared to nil in the comparable period last year, due to decline in fair value as a result of the decline in market conditions and quoted share prices of key underlying investment in the Malaysian market, which led to the re-evaluation of this investment based on these factors.

– Zakat and income tax expense increased by SAR 92m.

Earnings before interest, taxes, zakat, depreciation and amortization (EBITDA) for the 9 months period of 2022 amounted to SAR 19,577m compared to SAR 17,073m for the corresponding period last year, with an increase of 14.67%, and for the third quarter amounted to SAR 7,073m compared to SAR 5,606m for the same quarter last year, with an increase of 26.17%.

The total number of Treasury shares related to the Employees Stock Incentives Plan stood at 9,629,357 shares at the end of the third quarter 2022 and those shares are not entitled for any dividends distribution. As a result, basic earnings per share (EPS) was calculated based on the weighted average number of ordinary shares in a total of 4,993,052 shares (in thousand) for the 3rd quarter of 2022.