Mobily’s Q4 beats estimates on higher revenues: Al Rajhi Cap

Etihad Etisalat Co. (Mobily) reported a net profit of SAR 80 million in Q4 2018 beating Al Rajhi Capital's estimated loss of SAR 107 million, the brokerage firm said in an earnings review on Wednesday.

The telco’ first profit since Q2, 2016, was driven by top-line beating the brokerage's estimate by SAR170 million, reversal of Zakat and reversal of provisions of nearly SAR600 million.

Revenue growth was a result of an increase in subscribers with favorable mix, FTTH & data revenue and growth in business unit revenues driven by government sectors.

"Had it not been for reduction in interconnection rates, revenue growth would have been even higher at 14 percent," the consultancy noted.

EBITDA margin widened to 42.4 percent in Q4 2018 from 32.2 percent in Q4 2017, as finance charges increased 31.3 percent year-on-year (YoY) to SAR 214 million, due to higher SAIBOR and ceasing of capitalization of expenses related to debt.

"We believe that the company is continuing improve its performance, but overall the company has a visibility of top line growth of 3 percent YoY beyond 2019. The debt is high and the operating cash flows (without any benefit from accounts payables) are only marginally higher than capex required," the report said.

Al Rajhi Capital assigned a "neutral" rating on the stock, maintaining the target price at SAR 17.5 a share.