Saudi Telecom Surges Most Since 2008 as Profit Beats Estimates
Saudi Telecom Co. (STC), the kingdom’s largest telecommunications provider, advanced the most in almost five years on a 73 percent gain in quarterly profit after cutting costs with the sale of an Indonesian unit.
The stock advanced 8 percent to 48 riyals as of 1:30 p.m. Riyadh time, the highest level since April 2010. The stock has gained 11 percent this year. That compares with a 17 percent increase at the Tadawul All Share Telecommunications Index.
Third-quarter net income rose to 3.39 billion riyals ($900 million) from 1.95 billion riyals in the year ago period as an improvement in operation efficiencies lowered service costs and operating expenses, the company said yesterday. That beat the mean estimate of nine analysts for profit of 1.97 billion riyals.
Saudi Telecom, the Persian Gulf’s second-biggest phone company, agreed last month to sell PT Axis Telekom Indonesia to PT XL Axiata Tbk., a unit of Malaysia’s largest mobile-phone operator. XL Axiata, a 66.5 percent-owned subsidiary of Axiata Group, agreed to settle $865 million of Axis debt.
“There is bigger story here than their earnings,” Asim Bukhtiar, senior analyst at Riyad Capital, said by telephone today. “They reached an agreement last quarter to sell Axis, their Indonesian operations. Our calculations indicate that it was a very costly venture for STC.”
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