A recent decision to slash call rates by the Saudi telecom regulator will likely affect the market share of local telecom operators, NCB Capital said in a report.
The investment arm of the National Commercial Bank (NCB) reaffirmed an overweight rating on Saudi Telecom Co. (STC) and kept its neutral recommendation on Zain Saudi.
Shares of Etihad Etisalat (Mobily) remained under review. Mobily’s potential telecom towers sale is seen as a positive step, which will likely boost the telco’s cash flows, the brokerage firm said.
Both Zain and Mobily recently offered service plans with reduced rates at SAR 0.19 per minute.
NCB Capital pointed out that the reduced termination rates should help Zain Saudi gain market share, as they are more likely to weigh on its competitors’ market share.
However, STC was selected as the top pick given the telco’s strong balance sheet and potential dividend growth.
Argaam reported in February on a decision made by the Communication and Information Technology Commission (CITC) to reduce wholesale call rates by 40 percent to SAR 0.15 from the SAR 0.25 previously charged for the service on mobile networks. Fixed termination charges were slashed to SAR 0.07 from SAR 0.10.
The new rates came into effect on May 1.
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NCB Capital Recommendations |
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Target price (SAR) |
Rating |
Company |
|
82.80 |
Overweight |
STC |
|
NA |
Under review |
Mobily |
|
11.70 |
Neutral |
Zain |
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