Saudi Telecom’s Q4 beat estimates: Al Rajhi Cap

Saudi Telecom Co. (STC) reported a net profit of SAR 3.1 billion in Q4 2018, higher than Al Rajhi Capital's estimates of SAR 2.9 billion, the brokerage firm said in an earnings review on Thursday.

"The bottom-line beat was helped by better than expected reversal of costs post change in commercial service fee calculation," it noted.

The telco reported revenues of SAR 13.16 billion in line with the brokerage's estimates of SAR 13.15 billion.

Al Rajhi Capital assigned "neutral" rating to STC, revising the target price upwards at SAR 98 a share.

The upward revision is supported by structural improvement in EBITDA by 15 percent due to future lower commercial fees, increase in target valuation multiples due to index inclusion and the possibility of an increase in dividend due to lower fees and improvement in receivables.