Saudi telcos may benefit from price hikes in Q2: report

The Saudi telecom sector’s results for the second quarter of 2018 may benefit from the hike in prices implemented by all players as of January this year, Al Rajhi Capital said in a sector report.

However, the decline in the number of expatriates remains a concern and may continue to hit the subscriber base due to as dependent levies increase, which would negatively impact revenue growth.

The revenue trend for all telecom firms for the previous few quarters indicates that the worst may be over, and the current quarter may hold better results than Q1.

“Though there is limited scope for any further major cost efficiency measures, profit margins drivers depend mainly on rising share of data services in total revenue, as well as the increase in prices,” Al Rajhi Capital said.

Data usage may also get additional boost this quarter due to the month of Ramadan, and the FIFA World Cup, which starts in mid-June.

Overall, Q2 is expected to be better than Q1, including for Mobily, which outperformed this quarter.

Al Rajhi Capital maintained a “Neutral” rating on STC, Mobily and Zain’s stocks.

The investment arm of Al Rajhi Bank raised the target price for Mobily to SAR 16.5 per share from SAR 14.9 per share, while it kept the target prices unchanged for both STC and Zain at SAR 78.5 per share and SAR 7.3 per share, respectively.