STC's Q2 net profit misses estimates, says Riyad Cap

Saudi Telecom Co.’s (STC) Q2 2018 net profit of SAR 2.4 billion came below Riyad Capital and street forecasts' of SAR 2.7 billion and SAR 2.5 billion, respectively.

Revenue almost stabilized at SAR 13.2 billion, as the sector has been impacted by regulatory and market challenges, Riyad Capital said in an earnings review.

"Consumer spending has generally been subdued due to economic slowdown while implementation of VAT has also been a factor towards moderate telecom spending," the brokerage firm added.

Gross profit margins dropped to 54 percent in Q2 2018 from 56% in the previous quarter, due to the high cost of services.

STC's management expects better pricing in Q3 2018.

Net profit is expected to stand at SAR 10.9 million in fiscal year 2018 and SAR 11.2 billion next year.

Riyad Capital added that it affirmed its "neutral" rating on the stock with a price target of SAR 73.00.