Saudi Telecom Company (STC) reported an annual net profit increase of 14.3% compared to the previous year, for the period ending 31 December 2017, to reach SR 10,174m. Gross profit for the year reached SR 29,555m, an increase of 3% compared to the previous year. STC CEO Dr. Khaled Biyari touted the company's cost optimization initiatives and the shift in its strategy with a clear focus towards digitization.
The company's financial results are positive, except for a 4.3% decrease in consolidated revenues for the year compared to the previous year, which reached SR 51,362m. Operating profit for the year reached SR 11,104m, an increase of 11.6% compared to the previous year; and earnings before interest, tax, depreciation and amortization (EBITDA) for the year reached SR 19,311m, an increase of 7.1%.
STC said it will distribute a total of SR 2,000 million in cash dividend for Q4 2017, representing SR 1 per share.
Dr. Biyari said the company's increase in net profit is attributable to the improved operational efficiency and successful cost optimization initiatives. The drop in consolidated revenues, he added, is mainly attributable to the "decline in consumer sector performance due to challenging economic conditions and regulatory environment, for example lifting the ban on VoIP that significantly affected the international calls revenue."
However, Dr. Biyari said the impact of voice decline on the company's revenue was significantly offset by the strong growth of data revenue. Furthermore, STC's FTTH customer base in Q4 2017 increased by 5.1 percent and 20 percent as compared to Q3 2017 and Q4 2016 respectively.
In addition, the company's strategy of diversifying sources of income also resulted in significant growth during the period in Enterprise and Wholesale sectors revenues which contributed positively to the performance of the company. Also, international operations, mainly the controlled international subsidiaries, contributed positively.
Expanding and diversifying
Dr. Biyari said the results of Q4 2017 "were good given the successful cost optimization initiatives and for the shift in the company's strategy with a clear focus towards digitization. The company has been investing in the areas of technology and digitization and it expects this positive business momentum to continue."
He said the company's transition to its new strategy that focuses on growth and digitization would bolster its leadership position in delivering the best digital solutions to the Saudi market while aspiring to become the world-class digital leader in the MENA region.
"STC's strategy will support the vision 2030 of the Kingdom and the National Transition Program 2020 by introducing and investing in latest technology (with focus on cyber security, cloud computing, Internet of things, etc.), local & smart content development and job creation," said Dr. Biyari. "STC also aims to keep investing in advanced and robust networks."
Dr. Biyari also touched on STC's initiative to expand and diversify its overall business profile by exploiting its strong balance sheet and healthy assets base. He explained that STC has progressed well in this direction and has taken various key initiatives such as setting up of a technology venture fund (STV) and rebranding and re-strategizing the retail operations under STC Channels.
STC has also launched the new identity of its specialized communication services under the name of STC Specialized (STCS), formerly called "Bravo". This is an important step towards achieving STC's goals and future vision of building a unified national network for specialized communications, emergency and crisis management (critical-mission network).