Global Research has a “hold” rating on Etihad Etisalat Co. (Mobily), with the target price at SAR 30 a share.
The telco’s successful talks with creditors to reset the debt covenants have mitigated fears over its ability to continue as a going concern, the research arm of Global Investment House said in a note Wednesday.
The kingdom’s second-largest mobile operator is projected to see a gradual turnaround and report net profit of SAR 250 million and SAR 646 million for 2016 and 2017, respectively.
Meanwhile, this year’s revenue will likely decrease by 3.2 percent to SAR 13.96 billion, hurt by the biometric verification system and further loss of market share to Saudi Telecom Co., Zain Saudi and MNVOs, Global added.
A possible sale-and-leaseback transaction of 10,000 towers will take time as the sale decision is pending a series of approvals including that of the Saudi telecom regulator.
“We don’t expect any payment of dividends during the forecast period as the first priority will be to meet the debt obligations and capex requirements,” the research firm added.
The stock valuation could be raised on faster-than-expected monetization of fiber-optic network and a higher-than-expected rise in data prices and average revenue per user (ARPUs).
In addition, Mobily’s price target could be upped between 4 percent and 9 percent if the company wins a claim against Zain Saudi.
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