Mobily’s Q1 beats estimates on higher revenue, lower expenses: NCBC

Etihad Etisalat Co. (Mobily) reported better-than-expected results in Q1 2018 with a net loss of SAR 93 million, compared to NCB Capital and consensus estimated loss of SAR 171 million and SAR 187 million respectively, the brokerage firm said in an earnings review on Monday.

The better than expected results were mainly driven by higher than expected revenues and lower expenses, it added.

The telco’s revenues, which slipped 1.1 percent year-on-year (YoY) to SAR 2.83 billion, beat NCBC's estimate of SAR 2.77 billion.

“We believe the better than expected revenues is due to higher income from data which offset the negative impact of lower MTR income, the decline in the number of mobile users and the introduction of VAT,” the report said.

Gross profit at SAR 1.66 billion came in higher than NCB Capital's estimate by 5.2 percent. Gross margin was also better-than-expected at 58.7 percent due to higher data contribution, lower MTR costs and lower income from sale of low margin phones.

NCBC recommended a “neutral” rating on the telecom operator, with a target price of SAR 16.5.

Limited growth in top-line, tougher competition, and the ongoing losses remain key concerns for the firm, the report said.

“We believe Mobily’s ability to control its costs and the progress on RISE strategy will be the key drivers in 2018. We expect Mobily to report a net loss of SAR 452 million in 2018 and to reach breakeven in 2019,” NCBC added.