NCB Capital says neutral on Mobily, business battered by tough environment

NCB Capital said Mobily’s losses for Q4 2017 came higher than a consensus estimate of SAR 166 million, as the company posted a net loss of SAR 182 million.

This compares to a net loss of SAR 70 million in Q4 2016, and SAR 174 million in Q3 2017.

Such weak results were driven by the impact of unblocking VoIP, lower termination rates (MTR), increasing competition, lower client base, NCB Capital said in a recent note.

Lower sales, increasing competition and ongoing losses remain key concerns. “We believe Mobily’s ability to improve sales will be a key catalyst going forward.”

“We are neutral on the stock with a price target of SAR 22.8,” the company said.

The company's top-line declined by 2.8 percent YoY to SAR 2.8 billion in Q4.

Mobily sales declined 2.8 percent on a yearly basis. The number of mobile subscribers also declined by 10.1 percent to 44 million with a penetration rate of 139 percent.

“We expect these rates to continue to decline with the implementation of expats' levy and other economic reforms,” NCB Capital added.