STC reports 25% net profit growth for Q3, 2012

STC continues delivering strong revenue growth domestically and internationally. For Q3 2012, the Company reported 8% increase in consolidated revenues reaching SR15,146m compared to SR14,015m in Q3 2011.

The increase in revenues, is attributed to the growth in Broadband (fixed & mobile), Business sector services and wholesales services domestically and from international operations.

As a result of the increase in revenues from all services & the enhancement in the operations efficiency domestically, Operating income for the 3rd quarter increased by 0.5% to reach SR3,017m compared to SR3,000m for the same period in 2011.

For the 9 months, operating Income increased 11% reaching SR9,352m. Earnings before interest, Zakat and taxes, depreciation and amortization (EBITDA) for Q3 2012 increased 1% reaching SR5,253m compared to same period last year.

STC reported a 25% increase in net Income for Q3 2012 to reach SR1,954m compared to Q3 2011, and reached SR6,883m for the 9 months period with an increase of 28% compared to the same period last year. While net income decrease by 19% compared to the previous quarter despite the 4% increase in Q3 consolidated revenue compared to Q2, is attributed to the increase in operating expenses in our international operations in Q3.

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 SR1,000m in cash dividend for Q3 2012, representing SR0.5 per share.

Commenting on the results, STC Group CEO, Dr. Khaled A. Alghoneim, said, "The sustained strong financial results achieved during the third quarter reflects the efforts being made to constantly evolve, improve and develop the company's strategy both at the group and subsidiary levels. We maintain an acute focus on reinforcing our presence in our home market while at the same time capitalizing on opportunities for expansion both regionally and internationally. Our business is nothing without its customers - we recognize that our customers are the key to our ongoing success. We understand that we need to be relevant and customer-centric, and we are therefore aligning our processes and strategies with the primary goal of enhancing the overall customer experience. As an extension of this thinking, we remain committed to being a valuable partner to the government of Kingdom. We continually seek to enhance our contribution to all sectors of the national economy through implementing sustainable infrastructure development plans, delivering operational efficiencies and increasing competitiveness in the telecom and IT sector. Mirroring this goal, as a company, we are looking to enhance our products and services to be competitive in our domestic and international markets. We are currently, embarking on a program that should improve operational performance and lead the group into a new work culture, to be agile and nimble to seize opportunities domestically and internationally. As we evolve as a company, we are constantly reassessing and improving the operations to increase the returns for our shareholders."

Domestically, we have upgraded our mobile network, introduced innovative and value added services that encourage mobile usage, and targeted packages to high value subscribers. This is underpinned by the Company's customer-centric approach and its efforts to enhance the overall customers experience. These efforts are producing results, STC's total domestic mobile customer (postpaid & prepaid) Increased 14% compared to Q3 2011 and 2% compared to Q2 2012.

The wireless broadband customer base also grew well in the third quarter, increasing by 17% compared to the immediate prior quarter. As a result, wireless broadband revenues grew by 68% during the same period compared to Q3 2011. This can be partially attributed to the increase in 3G and 4G coverage, which has led to the launch of new products and services that meet the needs of customers. Also, QuikNet sales during Q3 increased by 147% compared to same period last year, as a result to the various flexible QuikNet packages. In addition, STC continued to address roaming customers' needs in & out of the country, the number of customers roaming out of the country increased by 16% compared to Q2, and roaming customers in the country increased by 19% compared to Q2. This is as a result of the introduction of STC Data roaming package in more than 40 countries.

STC's fiber optic customers (homes & Businesses) increased 722% compared to Q3 2011 following the continued expansion of its "Fiber Optic" network (FTTH) & (FTTX in Saudi Arabia. STC's subscribers are now able to enjoy Internet speeds of up to 200 Mb/sec. The ongoing network expansion has also led to a further increase of 326% in the number of "InVISION" subscribers (STC's Interactive TV service) compared to Q3 2011 and 27% compared to the previous quarter. Fixed broadband subscriber during this quarter grew 18% compared to Q3 2011. Also, the number of subscribers in bundled services grew by 22% during the quarter, compared to Q3 2011.

STC has also invested significantly during the third quarter to ensure pilgrims traveling for the Hajj season have access to services they need, complementing the role of the Saudi government and its dedication to serving the Hajj pilgrims, by facilitating their communication locally and internationally. Preparations include the enhancement of network coverage, capacity increases of approximately 60%, the doubling of connection capacity between servers and boosting international link circles by more than 192,000 circles. A comprehensive range of services are now available in 53 different locations in the holly areas. The Company has also increased its network capacity with more than 747 new locations to be able to serve more than 26 million users in Makkah, Madinah and holy areas, by strengthening the networks and raising the efficiency of mobile and 4G LTE networks. With this, the total number of stations in Makkah and Madinah is now more than 2,400 stations, enabling smooth voice and video calls.

In addition, STC is providing "Marhaba" SIM cards in all land, air, and sea ports and Hajj ritual areas in Makkah and Madinah, enabling its customers and pilgrims to communicate with their loved ones anywhere in the world at competitive rates.

In addition, Wholesales revenues During Q3, 2012 increased 21% compared to same period last year and 3% compared to the previous quarter. This increase was a result of launching new services to regional & International operators and service providers.