Typography

The past week's news has been dominated by earnings reports. Most telcos showed a bounce back from the weaker results of Q2 during the first coronavirus lockdowns. However, with new lockdowns starting around the world, the outlook for Q4 is uncertain.

Telecom operators’ stc and Etisalat demonstrated a consistent performance in their home markets, Saudi Arabia and UAE respectively, despite challenging economic conditions.

Etisalat Group’s consolidated revenue bounced back from the previous quarter, amounting to AED 13.0 billion, representing an increase of 0.5% year over year, as it cut capital spending and added more subscribers.  Etisalat’s consolidated capital spending decreased by 17% to AED 1.5 billion, representing 12% of the consolidated revenues.

stc also witnessed an increase in revenues for the third quarter reaching SR 14,881m with an increase of 5.43% compared to the corresponding quarter last year. For the 9 months period of 2020, the revenues reached SR 43,737m an increase of 6.41%.

stc’s operating expenses decreased by 5.5% for the 9 month period of 2020 compared to 2019 due to a rise in selling and marketing expenses from an increase in doubtful debt provision in the current period.

Analysts’ assessments of the economic impact of COVID-19 are highly variable but it is clear that both incumbent operators are exceeding expectations.

The pandemic proved that the communications and information technology sector is the main enabler of various industries and sectors. Online education and remote working possibilities have brought a semblance of normality to uncertain times.  

Videoconferencing and social networks help us stay in touch with our families and friends. However, none of these technologies could exist without strong and resilient telecommunications and ICT infrastructure.

Q3 Revenue Comparison:

 

Q3 2020

Q3 2019

Change

Etisalat

$3.5bn

$3.5bn

+0.5%

stc

$3.76bn

$3.97bn

+ 5.4%

Nokia

$6.17bn

$6.64bn

- 7%

Huawei

$98.57bn

$86.2bn

+9.9%

                                               

Telecom vendors’ Nokia and Huawei also announced a strong set of financial results, supported by progress in 5G development.

Huawei announced its business results for the first three quarters of 2020, seeing a 9.9% increase in revenue from the same period last year. It recorded approximately US$98.57 billion in revenue, with a net profit margin of 8%, and appears to meet business expectations.

2020 has been an extremely difficult and challenging year for Huawei, not only because of COVID-19, but due to blacklisting and being subject to continuous restrictions from the US. However, Huawei will leverage its strengths in ICT technologies such as AI, cloud, 5G, and computing to “survive and forge forward, and fulfil its obligations to customers and suppliers,” the company said in a statement.

In Q3, Finnish equipment maker Nokia reported revenue of 5.294 billion euro, which is a 7% decline compared to the same period last year. Meanwhile, profit increased from 87 million euro in Q3 2019 to 203 million euro last quarter. Nokia’s earnings per share were 0.05 euro, missing analysts’ expectation of 0.07 euro.

Despite a “disappointing” 7% fall in net sales, in part due to poor services performance, the company launched a new strategy making changes to operating structure. The strategy-related announcement is just Phase 1 of the plan new CEO Pekka Lundmark has for Nokia, with Phase 2 and Phase 3 expected to be announced in December 2020 and March 2021.

The new structure splits Nokia’s business into four groups: Mobile Networks, IP and Fixed Networks, Cloud and Network Services and Nokia Technologies. The goal of the new structure is to improve the focus each of the group has on its targeted audience, with the emphasis of moving to the fast-growing network-as-a-service market.

 

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