Saudi Telecom Co. reported a nearly flat net profit of SAR2.83 billion ($753.1 million) for the second quarter of the year, as impairment charges relating to associates, taxes, and zakat rose.
Revenue for the quarter rose 6.5 percent annually to 16.9bn riyals, it said. Earnings before interest, taxes, zakat, depreciation, and amortization (Ebitda) during the period rose about 10.3 percent year on year to 6.2bn riyals.
Saudi Arabia is implementing its Vision 2030 strategy, which aims to steer its economy away from oil dependence. One crucial pillar is technology, with Riyadh encouraging entrepreneurship and seeking investments from local and foreign entities to develop the sector.
The kingdom, the Arab world’s biggest economy, is projected to spend about $33bn on ICT development in 2022, the International Data Corporation said in an April report. The sector grew 8 percent between 2019 and 2021.
The Riyadh-listed company, in which Saudi Arabia’s government holds a 64% stake through Public Investment Fund (PIF), also said the board had proposed a dividend of SAR1 or 10% per share, for a total of SAR1.99 billion. STC said Q2 sales revenue rose nearly 7% to SAR17 billion, but it was offset by the increase in the cost of revenues and operating expenses by SAR218 million and SAR353 million, respectively.
“This is in conjunction with the global economic factors, including the rise in interest rates and the change in share price for one of BGSM’s main investments in the Malaysian market, which led to the re-evaluation of this investment based on these factors, despite the growth in BGSM revenues,” STC said. STC was also among the Saudi companies that had its outlook upgraded to “positive” from “stable” by rating agency S&P Global, citing the state support the company receives. The increase will be done by capitalizing 30bn riyals from the company’s retained earnings and will support STC’s “growth and expansion strategy along with maximizing its shareholders’ return”, the company said at the time.
Zakat and income tax expense increased by SAR62 million. Half-year net profit came in 12% higher year-on-year at SAR5.87 billion.
