Saudi Telecom Company, the biggest telecoms operator in the kingdom by market value, reported a flat third-quarter net profit as the company experienced an increase in operating expenses.
Net profit increased to 2.8 billion Saudi riyals ($747 million) in the three months to September 30, compared to 2.7bn riyals during the same quarter last year, the company said in a statement to Saudi Arabia's Tadawul stock exchange, where its shares trade.
Operating profit, however, increased almost 4 per cent annually to 3.5bn riyals.
The company’s revenue increased 5.4 per cent yearly to 14.9bn riyals during the quarter.
“Saudi Arabia’s digital infrastructure allowed business to continue with great success across vital sectors in 2020 … reflecting a significant leap in the ICT sector,” Nasser bin Sulaiman Al-Nasser, STC’s group chief executive, said.
“The kingdom was also able to cope with the effects of the [Covid-19] pandemic, from increased data consumption to a higher demand on digital services,” he added.
STC is majority-owned by the kingdom's Public Investment Fund, which holds a 70 per cent stake in the telecom company.
The company, which has its headquarters in Riyadh, has about 13,500 employees in Saudi Arabia and more than 19,000 across the STC Group.
“The operating expenses [in Q3] increased by 919m riyals [year-on-year] due to an increase in selling and marketing expenses … as a result of the increase in doubtful debt provision in the current quarter and the increase in depreciation and amortisation,” STC said.
The company’s earnings before interest, taxes, zakat, depreciation and amortisation (EBITDA) for the third quarter was 5.8bn riyal, an annual increase of 10.5 per cent.
The company said that pandemic-driven changes in consumer behaviours propelled its business in the last quarter.
The pandemic proved that the communications and information technology sector is the main enabler of various industries and sectors, Mr Al-Nasser said.
“The opportunity has become available to benefit more from 5G technologies due to its linkage with artificial intelligence, big data analytics, cloud computing and the Internet of Things," he added.
Last month, STC said it could not reach an agreement on a 9bn riyal deal to buy a 55 per cent stake in Vodafone Egypt within the agreed timeframe.
If a deal were to be agreed, a majority stake in Vodafone Egypt will give STC a foothold in the Arab world's most populous country, as it looks to expand its operation in the region and beyond.