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Saudi Govt. Spending Increases 25% at End of Third Quarter

Custodian of the Two Holy Mosques King Salman bin Abdulaziz chairs a cabinet session (SPA)
Custodian of the Two Holy Mosques King Salman bin Abdulaziz chairs a cabinet session (SPA)
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Saudi Govt. Spending Increases 25% at End of Third Quarter

Custodian of the Two Holy Mosques King Salman bin Abdulaziz chairs a cabinet session (SPA)
Custodian of the Two Holy Mosques King Salman bin Abdulaziz chairs a cabinet session (SPA)

In a new sign that confirms the strength and vitality of the Saudi economy, non-oil revenues jumped 48 percent by the end of the third quarter of 2018 compared to the same period last year, while the volume of government spending increased 25 percent during the same period.

Saudi cabinet on Tuesday commended these latest figures, which reflect the positive results of reform measures and tremendous efforts to develop the economy.

The cabinet pointed out that the 48 percent growth of non-oil revenues and 25 percent growth of government spending contributed effectively to supporting economic growth.

These positive developments coincided with Saudi Arabia’s announcement of the 2019 budget, where total spending is expected to reach $295 billion, 7 percent higher than this year’s.

Meeting in Riyadh, the government also approved the amendment of Articles (4) and (5) of the Telecommunications Law, as part of its attempt to increase the efficiency of the telecommunications sector and boost the local economy.

Article 4 states that telecommunication services can only be provided through companies offering their shares for public offering, while Article 5 stipulates that license to provide mobile telecommunications services is subject to cabinet’s approval.

The decision to provide mobile telecom services through joint stock companies holds major economic and developmental significance. This decision will improve the financial and administrative performance of companies, in addition to adding value to the local financial market by listing more companies that operate.

Specialized reports show that the number of mobile subscribers by the end of last year was about 40 million, while pre-paid subscribers reached 74.8 percent. Last year’s number of subscriptions to telecommunications services was about 126.7 percent compared to the population.

The Communications and Information Technology Commission reported that the number of landlines at the end of last year was 3.6 million.

Regarding broadband services, the report showed that subscribers over the mobile networks by the end of last year reached 29.7 million, while subscribers through fixed networks reached 2.5 million.

According to the published financial results of listed companies of the ICT sector in the Saudi stock market, positive growth reached 6.04 percent during the first nine months of 2018, compared to the same period last year.

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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.