Decline in Saudi Arabia's pilgrimage visitors impacts telecom revenues

But major telecom firms still post net profit despite COVID-19 challenges

  
Riyadh, Saudi Arabia: Etihad Etisalat / Mobily buildings along Hanifa Valley Street - Mobily C1 Office Al Yabis - Saudi Arabian telecommunications services company - Kingdom Centre tower top left. Image used for illustrative purpose

Riyadh, Saudi Arabia: Etihad Etisalat / Mobily buildings along Hanifa Valley Street - Mobily C1 Office Al Yabis - Saudi Arabian telecommunications services company - Kingdom Centre tower top left. Image used for illustrative purpose

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Saudi Arabia’s major telecom operators have reported mixed impact from the coronavirus pandemic, but continued to demonstrate their resilience despite the challenges, the latest financial results show.

Etihad Etisalat (Mobily), the kingdom’s largest mobile telephone operator, reported a net profit of 783 million riyals ($208 million) for the full-year 2020, up from 31 million riyals in the previous year, on the back of higher revenues.

Mobile Telecommunication Company Saudi Arabia (Zain KSA) also managed to end the year with a positive but lower net profit, which amounted to 260 million riyals, down 46.4 percent from 485 million in 2019.

“[The company] continues to record net profit for four years in a row despite the outbreak of COVID-19,” Zain said in a bourse statement on Sunday.

The COVID-19 outbreak has impacted businesses worldwide, including telecom operators. In the UAE, mobile revenues fell partly due to a shift by consumers towards prepaid mobile phones, while revenues from roaming services also dropped due to mobility disruptions, according to a report by Paul Budde Communication released in July 2020.

“Many of the operators have observed a change in consumer behaviour during the pandemic,” said the report.

Zain KSA

In Saudi Arabia, Zain KSA incurred a 5.6 percent decline in sales/ revenue in 2020 due to a fall in pilgrimage visitors.

“[The] decrease in revenue by 5.6 percent [was] due to the cumulative impact of the pandemic which led to minimal numbers of visitors for Umrah, limiting Hajj to local pilgrims, in addition to the reduction of mobile termination rate in the second half of 2020,” Zain KSA said.

However, the company noted that it managed to partially absorb the negative impact on the net profit by decreasing its operational expenditures by 136 million riyals.

Overall, the company said its performance last year was still positive, thanks to its operational strategy that includes cost reduction measures.

“[The results] are a testament to the success of the company’s operational strategy and its attainment of a balanced financial approach that comes in line with a comprehensive capital restructuring, in addition to continually implementing the operational strategy based on reducing operational costs and enhancing fiscal governance in spite of the challenges,” it added.

Mobily

As for Mobily, an affiliate of the United Arab Emirates’ Etisalat, last year was a productive period for the company, with revenues growing by 4.4 percent to 14 billion riyals. Despite the pandemic, the company recorded higher demand for data services, as remote working and digitalisation accelerated.

“This is mainly attributed to the growth of data revenues, the growth of business unit and wholesale revenues, in addition to the growth and improvement of subscriber base,” the firm said.

Its earnings for the year reached 5.35 billion riyals, the highest in the last seven years and higher by 8.2 percent compared to the previous year.

“The [increase in earnings] is attributed to the company’s efficiency in managing its operations and the growth of revenues,” the company said.

(Reporting by Cleofe Maceda; editing by Mily Chakrabarty)

Cleofe.maceda@refinitiv.com

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