The Saudi Arabian telecom firms reported healthy Q3 revenue and gross profit growth numbers, which were better than expected despite a decline in expats population, no material increase in data prices and a likely pick up in VoIP calling, Al Rajhi Capital said in its report.
What drove better numbers was mainly a combination of factors, the brokerage firm said.
One, healthy handset sales (in-line with commentary on electronics sales by Jarir and eXtra); two, higher than expected increase in foreign visitors, led by Hajj season (1.76 million foreign visitors in 9M 2018 compared to the same number for whole of 2017); three, contribution from government related contracts / business contracts.
All the three firms reported healthy clean EBITDA margins (36-39 percent), the report added.
“On the whole, while there were positives (unwillingness to go for pricing competition and trends of gradual stabilization in revenues), the core performance appears broadly in-line with expectations,” it noted while maintaining ‘Neutral’ rating on STC, Mobily and Zain KSA stocks.
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