Promotions drag down Saudi Telecom profits

Saudi Telecom Company (STC) has recorded its smallest quarterly profit in more than two years as its net income dropped around 20% during Q1.

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By  Administrator Published  April 26, 2007

Saudi Telecom Company (STC) has recorded its smallest quarterly profit in more than two years as its net income dropped around 20% during Q1.

The Kingdom's incumbent operator saw its net profit fall to US$725.6million during its 2007 fiscal first quarter, ending March 31, in comparison to US$911.8million for the same period a year earlier.

This was steeper than the average 11.7% decline in profit forecast by analysts in a Reuters survey last month.

"The decline is due to reductions and the big promotions that the company offered its customers, which has led to an 18% rise in the number of customers," the operator said in a statement.

STC lost its monopoly over the Saudi mobile market in 2005 with the launch of Mobily. The Kingdom's second mobile operator has enjoyed rapid success in the country, capturing a 30% share of the market in under 18 months.

STC is set to face further competition on the mobile front from MTC, which won the third mobile licence in March.

Further competition is set to test STC as it will also soon lose its monopoly on fixed-line services after three consortia were this week awarded licences to offer services in the Saudi market.

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