Khaled Abanami, CEO of Etihad Etisalat Co. (Mobily)
Etihad Etisalat Co.’s (Mobily) revenue growth from all segments, diversified revenue sources and other operational-enhancement strategies were all contributors to its positive results in 2023, CEO Khaled Abanami told Argaam.
The company’s investments focused on developing infrastructure and new technologies, such as the internet of things (IoT), increased data centers and the expanded rollout of 5G services. Mobily will continue to study new investment opportunities in various projects to match the current technological development and digitalization push.
The telco seeks to continue fulfilling its long-term financial goals and its capital restructuring strategy, the CEO further stated, noting that the macroeconomic environment is favorable at the present time for growth.
Here’s the full interview with Abanami:
Q: Mobily’s profit rose to SAR 746 million in 2023, compared to SAR 606 million a year earlier. How can you view these results?
A: 2023 was a year of breakthroughs for Mobily despite the sector challenges. In 2023, we achieved the highest level of net profit in the past decade, witnessing a strong increase of about 35% year-on-year (YoY). This notable performance was primarily attributed to the growth in revenues across the board, as well as the earnings before interest, taxes, depreciation, and amortization (EBITDA). In addition, Mobily reported efficient spending, despite the 13.7% year-on-year (YoY) increase in financing costs (FCs) due to rising interest rates.
This was mainly attributed to revenue sources diversification and the implementation of strategies to enhance the efficiency of the company's operations. Mobily also remained committed to achieving its strategic goals, which have enabled this outstanding financial and operational performance. The company is also focused on delivering a distinctive and customer-friendly digital experience to enhance customer satisfaction. We continue our efforts to create added value and maximize returns for our shareholders.
Q: What investments did Mobily undertake in 2023, and how were capital expenditures affected by expanding the scope of the 5G network and increasing the coverage of the fiber optic network?
A: Digital transformation is an essential pillar for the future of the Kingdom and Mobily places this axis at the heart of its strategy and investments. The telco seeks to enhance the culture of innovation within the company by supporting research and development, encouraging employees to come up with new ideas and supporting innovation in the products and services provided to our customers.
Our investments during the year, which rose by about 11% YoY, focused on developing infrastructure and adopting new technologies such as the IoT. This is in addition to expanding in data centers and in the scope of 5G network deployment through about 6,000 sites equipped with 5G networks, distributed across the Kingdom, in addition to increasing the coverage of the fiber optic network.
Also in 2023, Mobily continued to expand in deploying the scope of 5G network services, with the coverage of 5G network increasing to 84% in seven major cities in the Kingdom.
Mobily's Fiber to the Home (FTTH) services continued to generate more value. The company accelerated its utilization of the network's broadband deployment and succeeded in enhancing the growth of the customer base YoY, which demonstrated higher demand for premium home services.
In addition, Mobily will continue to study new investment opportunities in various projects. This is to keep pace with technical developments and support the empowering of digital transformation, innovation, development and artificial intelligence (AI), besides increasing process automation as a national digital partner that contributes to achieving the ambitions of the Saudi Vision 2030.
Q: How was Mobily able to slash its financing portfolio by more than SAR 1.3 billion, and what is the impact of this on net debt-to-profit ratio?
A: A portion of the company’s outstanding loans has fixed interest rate or is subject to the company’s hedging agreements. This is part of the solutions previously taken by the company’s management with regard to managing risks related to changes in global interest rates. Mobily continuously monitors interest rates and its ongoing debt reduction strategy, backed by strong operating cash flows over the past five years. We have been able to reduce the financing portfolio, which supported the noticeable decline in the net debt-to-profit ratio before EBITDA, which reached 1.20 times by the end of the year.
Moreover, the company's outstanding financial performance, represented by an increase of about 100% in cash in 2023, enabled it to announce higher cash dividends for the year to SAR 1.45 per share, from SAR 1.15 per share a year earlier, with a distributed ratio of about 50%, which is financed from the company's cash flows. This reflected the success of Mobily's corporate strategies in achieving steady growth in profitability and placing its shareholders as its top priority.
Mobily seeks to continue achieving its long-term financial objectives and its capital restructuring strategy. It announced last month the signing of a Murabaha financing agreement with Saudi National Bank (SNB) with better terms and competitive interest rates for the purpose of financing working capital and the partial financing from the company’s existing financing to reduce this impact in general. Mobily's financial and operational success and enhanced efficiency over the past years were a major enabler in obtaining an investment-grade credit rating and creating added value for our shareholders, as this agreement reaffirms the confidence of partners in financial institutions in the telco’s capabilities and strategy.
Q: What are the main factors that helped achieving revenue growth of 6.7% in 2023? What sectors contributed the most to these revenues?
A: We launched in 2023 our corporate strategy, which enabled us to accelerate the pace of growth to move forward towards achieving our goals and consolidating Mobily’s position as a leading national digital partner in the field of technology, media and communications in the Kingdom, thus contributing to achieving the ambitions of Vision 2030.
Mobily's strategic focus has been on continuing to diversify the range of services and products and the solutions it provides to meet the growing and renewed needs of our customers, while constantly striving to provide the best services and experiences to all our partners. The company continued in 2023 its efforts to innovate digital products and solutions, in addition to concluding several promising strategic partnerships. It has also focused its efforts on investing in digitization, modernizing the information technology network and expanding projects. Further, it completed its investments in infrastructure and new technologies such as the IoT, in addition to expanding in data centers and the deployment of the 5G network, in addition to increasing the coverage of the fiber optic network.
The business segment has contributed to achieving strong growth in revenues during 2023, with a rise of 21% YoY. Our endeavor to provide distinguished services has culminated in concluding several promising partnerships and attracting a large number of new clients, especially SMEs and government agencies.
Moreover, the business segment is a key basis for growth in the coming years. We invested in multiple strategic projects to improve connectivity for our customers, in addition to establishing two new data centers to accommodate future growth opportunities. We have also launched AI-based products and several other innovations to enhance cybersecurity. Besides, we have strengthened partnerships with strategic government clients such as NEOM, the Ministry of Health, the Ministry of Municipal and Rural Affairs and Housing as well as The Red Sea project, based on our commitment to reinforcing customer experience and our belief in the importance of cooperation to achieve the aspirations of our customers and society as a whole.
Q: What are your expectations for the company’s performance in 2024?
A: The macroeconomic environment is currently favorable for growth. Saudi Arabia is expected to see growth in the gross domestic product, in addition to forecasts of a rise in the population and a recovery in tourism in the Kingdom, which will drive us to provide more telecommunications services and improve the quality of the network. Mobily will maintain its efforts to continue to grow and provide services at a high, advanced level, achieve its strategic ambition, create added value for its shareholders and partners, and contribute to providing new opportunities as an enabler of the digital economy that meets the ambitions of Vision 2030.
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