Etihad Etisalat Telecommunications Co.’s (Mobily) second-quarter net profit (SAR 18.8 million) came in line with estimates set by Al Rajhi Capital (SAR 23 million) but fell below street estimates (SAR 50 million), the brokerage firm said in an earnings review.
The steady performance was mainly driven by cost optimization benefits, which were partially offset by rising interest costs, the brokerage added.
“After previously reporting two consecutive quarterly profits, Q2 results reaffirm the new profit normal for the company at around SAR 15 to 20 million. Given the overall challenges, we believe any improvement is likely to be only gradual,” the report said.
Mobily’s key challenge is to restore revenue growth through identifying potential opportunities in an already matured market with intense competition from a more aggressive Zain, the brokerage said.
Pressure of biometric verification system implementation and higher interest cost could continue to impact performance, it added.
Al Rajhi Capital remained ‘neutral’ on Mobily’s stock with a target price of SAR 28 per share.
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