Driven by increase in subscriptions and digital bank initiatives
Telecommunications companies listed on the Saudi Exchange (Tadawul) achieved a profit growth of 43 percent during the third quarter of this year. The collective profits reached a total of SAR5.7 billion ($1.52 billion).
The companies that contributed to the robust total include three whose fiscal year ends in December, namely: STC, Mobily, and Zain Saudi Arabia. Meanwhile,GO Telecom’s fiscal year ends annually in March.
The positive performance was driven by an increase in subscriptions and the expansion of digital banks. Moreover, companies have diversified their services resulting in the robust performance, especially with the Hajj season which coincided with the results of the third quarter. During this season, Saudi telecommunications companies benefitted significantly by way of increasing their customer base exponentially.
Sector profits
The profits of Saudi telecommunications companies increased by SAR1.71 billion in the third quarter of the year. That is compared to the same quarter of last year during which they recorded profits of about SAR4 billion. This comes after three companies announced their financial results in the financial market.
Moreover, the Saudi telecommunications companies’ profits jumped by 57.43 percent during the third quarter compared to the second quarter of 2023. The profits recorded in the third quarter amounted to about SAR3.63 billion. They also recorded a 10.3 percent growth in revenues, reaching SAR24.73 billion. This is in comparison to the SAR22.4 billion which was recorded in the same quarter of 2022.
In addition, the companies recorded a significant jump in profits during the first nine months of the year. They recorded an increase of 283 percent or about SAR2.71 billion. Moreover, their net profits rose to SAR13.47 billion, compared to SAR10.76 billion in the same period last year.
Reasons for growth
Ithmaar Bank’s general manager, Dr. Muhammad Makni, emphasized that telecommunications companies are among the most significant pillars of the Saudi economy. They receive great interest from investors. Their performance also supports the growth of non-oil sector outputs.
In 2020, the size of the telecommunications market in Saudi Arabia reached $36 billion. Moreover, it contributed to the growth of the gross domestic product (GDP) by about 5.1 percent.
Moreover, Makni also highlighted that stc’s performance contributed to the growth of the wider telecommunications sector in the third quarter. The telecoms firm achieved a jump in profits by 38.5 percent during the period. It also achieved a 9.1 percent growth in profits during the past nine months compared to 2022.
Hajj season
Meanwhile, other experts say that the most influential reason for the growth of the telecoms sector in the third quarter is the Hajj season. Saudi telecommunications companies greatly benefited from the volume of sales this season.
Another factor that contributed to the sterling performance of the telecoms sector is the profits made by the telcos in non-core businesses. For example, stc sold land worth SAR1.92 billion in the city of Al-Khobar. Meanwhile, Zain sold about 8 percent of its towers to one of the Public Investment Fund companies.
Digital banks also contributed to the increased profitability of these companies. Notably, Mobily achieved high profitability due to its focus on enhancing its services provided to the business sector.
Source: economymiddleeast