Etihad Etisalat Co. (Mobily) reported a net loss of SAR 30.9 million in Q3 2018, its lowest losses since Q3 2016, compared to NCB Capital and consensus estimates of net loss of SAR 82.4 million and SAR 70.4 million, respectively.
These better-than-expected results were driven by strong growth in revenues and a reversal of Zakat provision, NCBC said in a note on Monday.
Adjusting for the Zakat reversal of SAR 55 million, net loss stands at SAR 85.9 million.
Revenues stood at SAR 2.98 billion, up 6.1 percent year-on-year (YoY) and 2.8 percent quarter-on-quarter (QoQ), 4.0 percent higher than NCBC estimates of SAR 2.86 billion.
“We believe better than expected revenues are due to higher income from government contracts and fiber optics which offset the negative impact of MTR and the introduction of VoIP,” NCBC said.
Gross profit stood at SAR 1.76 billion in Q3, coming in-line with estimates, while gross margin was 59.1 percent in Q3 18, lower than estimates of 61.0 percent and Q3 2017 levels of 59.6 percent.
NCBC said the positive variance on the top-line level was fully offset by higher expenses, due to government contracts which are of a lower margin.
“We are Neutral on Mobily with a PT of SAR 17.8,” the investment arm of the National Commercial Bank (NCB) noted, adding that the decline in losses and EM indices inclusion are key positives of the company.
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