JEDDAH, 1 November 2006 -- Saudi Telecom Company (STC) posted a profit of SR10.013 billion for the first nine months of this year, registering a 9.1 percent increase compared to the figure of last year's SR9.176 billion.

In a statement issued yesterday, the Saudi telecom giant attributed the growth in profits to an increase in the number of clients and a subsequent rise in domestic and international calls.

"Net income from operations reached SR10.075 compared to SR9.95 billion last year with an increase of 1.2 percent while the profitability of STC shares rose to 5.1 percent," the statement said.

Operation revenue for the company rose during the nine months to SR25.546 billion, compared to SR24.062 billion in 2005, registering a growth of 6.2 percent despite the discounts the company had offered on telephone charges, it said.

However, the company pointed out that its revenues for the third quarter declined by 1.8 percent to SR3.2 billion compared to SR3.26 last year. Revenue rose 3.7 percent to SR8.4 billion compared to SR8.1 billion last year.

STC attributed the decline to higher international interconnection charges. According to Marc Hamoud, telecom analyst at Dubai-based Shuaa Capital investment bank, interconnection charges in Europe and the United States have been rising.

Khaled Al-Jasser, acting chairman of the company, said STC's board of directors that met on Monday night decided to distribute SR3 billion in dividends among the shareholders at the rate of SR1.5 for each share. STC shareholders at the closing of the market on Nov. 8, 2006 will receive the dividends, which will be distributed on Nov. 20, 2006.

Al-Jasser expressed his satisfaction over the company's excellent financial results and its strong fiscal position. He said the number of STC's clients was growing day by day, adding that the number of mobile phone subscribers reached 13 million. STC has won eighth position among leading telecom companies in the world and 121st position among 500 international companies in terms of market value, according to a Financial Times survey.

STC has improved its services in the face of increasing competition from its rival Mobily, which earned a third quarter profit of SR217 million compared with a SR166 million loss in the previous year.

Saad Al-Qahtani, corporate communication service manager at STC, said the company's special discount rate during Eid increased the number of calls by 50 percent compared to normal days. "As for the special discount rates on pre-paid SAWA cards, they will continue throughout the year," he added.

He said that there was a large demand for SAWA cards because, unlike other operators, the STC billing system works on a per-second basis. "That means that you are not charged per minute and only charged per second, even if you make a one-second call," he said, adding that this system had been adopted by STC since its establishment in both pre-paid and post paid services.

By P.K. Abdul Ghafour

© Arab News 2006