Mobile Telecommunications Company Saudi Arabia (Zain Saudi) net profit of SAR 129 million for the first quarter of 2019 has missed Riyad Capital and market consensus expectations, the research firm said in an earnings review.
“According to the company, the quarterly decline in net income is due to the variance in reversal to the tune of SAR 278 million from the settlement signed with MOF, MCIT and CITC,” the report said.
It appears both operational performance as well as reversal of provisions were below expectations, it said.
Revenue grew by 2 percent quarter-on-quarter (QoQ) and 24 percent year-on-year (YoY) to SAR 2.1 billion due to rising demand for products, and likely higher data prices, the report said.
The number of subscribers fell around 2 percent QoQ, but rose by 200,000 YoY in Q1.
Gross profit reached SAR 1.5 billion, down 19 percent QoQ but up 32 percent YoY, attributed to the decrease in royalty fees from 15 percent to 10 percent.
Gross margin reached 71 percent this quarter compared to 89 percent in Q4 and 66 percent a year earlier, due to lower reversals as compared to the previous quarter.
On a yearly basis, operating and administrative expenses have decreased by SAR 21
million due to reclassification of lease from operating expenses to depreciation on
adoption of IFRS 16.
Riyad Capital is still updating its rating recommendation on the stock and target prices, and will issue them soon.
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