Saudi Telecom Company’s (STC) Q4 net income of SAR 3.1 billion came in line with Riyad Capital's forecasts of SAR 3.08 billion, the brokerage said in a note on Wednesday.
However, revenue stood at SAR 13.1 billion, beating the brokerage's estimates of SAR 12.6 billion.
Citing CITC data, the note said that the number of subscribers has decreased by about half a million to 42.5 million subscribers by Q3-end, while cost of sales fell on the back of a reduction of royalty and annual license fees by SAR 579 million.
Riyad Capital maintained a "neutral" rating on the stock, revising the target price to SAR 98.
"STC has had a great year overall, helped by the reversal of costs related to commercial fees, despite external challenges (VAT, VoIP amongst others). We are raising our forecasts going forward, also incorporating the SAR 2.3 billion reversal over the next three years," the brokerage noted.
It estimates revenues of SAR 53.6 billion for 2019 and SAR 55.2 billion for 2020 with net income at SAR 13.4 billion and SAR 14.0 billion respectively.
"A pre-announced and stable dividend policy adds comfort to investors, the additional SAR 2/share dividend for Q4 (on top of the stable SAR 1/share) is enticing," Riyad Capital added.
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