Etihad Etisalat Co.’s (Mobily) first quarter net profit of SAR 17 million, fell short of NCB Capital’s and consensus estimates of SAR 201 million and SAR 36 million respectively, the brokerage said in an earnings review Wednesday.
The weaker than expected results are attributed to a 6 percent YoY decline in sales and higher financing costs.
“Sales have been declining for the past four consecutive quarters due to the impact of lower interconnection charges and a decline in market share,” it said.
Revenues at SAR 3.4 billion is the lowest figure since Q4-14. The company attributed the weakness to lower interconnection charges, the impact of the finger-print verification initiative and lower sales of equipment.
“We believe the decline indicates a weakness in the market share as STC local operations grew by 2.9 percent,” NCBC said.
The impact of finger-print initiative and the second revision in interconnection charges may put further pressure on the upcoming results, the note added.
NCBC reaffirmed a “neutral” on Mobily at a target price of SAR 31.90 per share.
Mobily reported a net income of SAR 17 million compared to a net loss of SAR 45 million in Q1 2015 and a net profit of SAR 11 million in the fourth quarter of 2015.
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