Saudi Telecom Co. (STC), the Arab world’s largest telecom company by market value, posted a worse-than-expected 62% fall in fourth-quarter profit this past week, which it blamed on foreign currency fluctuations. The news caused STC shares to drop 10%, bringing this year’s total decline to 6.5%. The company’s fourth-quarter operating profit fell 20% to 2.38 billion riyals, which Ibrahim al-Alwan, deputy chief executive at KSB Capital Group, chalks up to growing competition. In fact, Saudi Telecom is said to be under “intense pressure to improve profitability as a regional telecom war heats up, with rivals like Kuwait’s Zain and Emirates Telecommunications competing within Saudi Arabia.”
However, the future looks bright. STC won a bid for Bahrain’s third mobile- phone license as the company continues to seek to expand its global operations in countries like Malaysia, India, Indonesia, South Africa and Kuwait in order to offset declining subscriber growth at home. “Bahrain still has potential for growth with GDP growth still high, the telecom sector is growing and more than 50 percent of the population is under 30,” said Fahad bin Mushayt, STC’s head of strategic investments.