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Shareholder Firms Capital Jumps 49% in Saudi Arabia

A Saudi jeweller counts Saudi Riyal banknotes money after selling gold to a customer in a jewellery shop at the surrounding area of the Grand Mosque during the annual haj pilgrimage in the holy city of Mecca. Reuters.
A Saudi jeweller counts Saudi Riyal banknotes money after selling gold to a customer in a jewellery shop at the surrounding area of the Grand Mosque during the annual haj pilgrimage in the holy city of Mecca. Reuters.
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Shareholder Firms Capital Jumps 49% in Saudi Arabia

A Saudi jeweller counts Saudi Riyal banknotes money after selling gold to a customer in a jewellery shop at the surrounding area of the Grand Mosque during the annual haj pilgrimage in the holy city of Mecca. Reuters.
A Saudi jeweller counts Saudi Riyal banknotes money after selling gold to a customer in a jewellery shop at the surrounding area of the Grand Mosque during the annual haj pilgrimage in the holy city of Mecca. Reuters.

The Saudi Ministry of Commerce and Investment announced on Thursday the growth of shareholder firms’ capital up to 49 percent in 1438 A.H., compared to last year. This indicates that the Saudi economic reforms are capable of creating additional investment opportunities for private sector firms.

In this context, the ministry announced on Thursday that around 4545 was the record of exporting firms to the kingdom in 1438 A.H., an increase of approximately nine percent in comparison to 1437 A.H.

The ministry’s statistics showed that the capital of established firms and others that became shareholder firms in 1438 A.H. exceeded SAR32 billion (USD6.1 billion), therefore capitals in shareholder firms grew 49 percent in comparison to 1437 A.H.

Notably, the number of operating firms in the kingdom surpassed 66,000, at a time when the ministry proceeds its pursuit to enhance the business environment, empower facilities, provide investment environment and develop advanced projects to serve the national economy, within the National Transformation Program 2020.

The kingdom achieved an unprecedented headway in indicators of ease of Doing Business in 2018, after conducting some reforms and taking procedures that contributed in enhancing the business and investment environment and consolidating investors’ confidence.

A report for the World Bank classified the kingdom among the top 20 reformative states in the world and ranked it second as to the high-income. In the report, the kingdom also came second among the G20s in terms of implementing reforms and enhancing business climate.

Saudi Arabia’s progress in ease of Doing Business for 2018 excelled in six of 10 axes: protecting minority investors, enforcing contracts, starting a business, cross-border trade, registering property and settling bankruptcy, the report added.

The Kingdom’s strong reforms have led to progress in protecting the minority shareholders, ranking 10th in the world, which is a strong signal to those interested in investing in the Kingdom, according to the report.

In the beginning of November, Fitch Ratings affirmed the Saudi rating at A+ with a stable outlook, and other similar international rating agencies took alike steps.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.