STC’s Q4 2019 profit misses estimates, says Aljazira Capital

Saudi Telecom Co. reported a net income of SAR 2.4 billion in Q4 2019, missing both Aljazira Capital and market consensus of SAR 3.1 billion and SAR 2.8 billion, respectively.

The profit came in below the brokerage firm’s estimate mainly due to a SAR 928 million increase in operating expenses.

“Operating costs are likely to remain high over the next two years,” it noted.

However, the company’s continuous investments in infrastructure and technologies have started paying off in the form of an increase in mobile and fiber optics subscribers as well as growth in data revenue, supporting the telco’s topline.

STC is well positioned to tap opportunities in the IoT, cloud, 5G, and enterprise solution segments following the expansion of 5G, FTTH networks and potential from STC Pay.

Aljazira Capital expects the company’s net profit to grow by 17.3% in 2020 to SAR 12.6 billion compared to SAR 10.7 billion in 2019.

The brokerage firm maintained its recommendation of “overweight”, setting the target price at SAR 112.2 per share.