| Element | Current quarter | Similar quarter for previous year | % Change current | Previous quarter | % Change previous |
|---|---|---|---|---|---|
| Net profit (loss) |
-
|
-
|
-
|
-
|
8.01
|
| Gross profit (loss) |
1,672
|
1,741
|
-
|
1,633
|
2.39
|
| Operational profit (loss) |
-
|
-
|
97.19
|
-
|
32.73
|
| All figures are in (Millions) Saudi Arabia, Riyals | |||||
| Element | Current period | Similar period for previous year | % Change |
|---|---|---|---|
| Net profit (loss) |
-
|
-
|
- |
| Gross profit (loss) |
4,970
|
5,754
|
- |
| Operational profit (loss) |
26.1
|
178.4
|
- |
| Earning or loss per share, Riyals |
-
|
-
|
- |
| All figures are in (Millions) Saudi Arabia, Riyals | |||
| Element | EXPLAINATION |
|---|---|
| Reasons of increase (decrease) for quarter compared with same quarter last year | Q3 2017 Net Result amounted to a loss of SAR 174.5 million compared to a loss of SAR 166.3 million in Q3 2016, with an increase in losses by 4.9%. This was mainly due to the following: Revenues decreased by 4.3%, at SAR 2,806 million compared to SAR 2,932 million in Q3 2016 mainly due to the erosion of the company base, as a result of implementation of the finger print process during 2016, which shrank the telecom market that is still subject to price pressures. Gross profit decreased by 4%, at SAR 1,672 million compared to SAR 1,741 million in Q3 2016. This resulted mainly from the decrease in revenues. EBITDA increased by 10.6%, at SAR 903 million (or 32 % EBITDA margin) compared to SAR 816.6 million (or 28% EBITDA margin) in Q3 2016. This increase is due to the cost optimization through several cost reductions, and savings from re-negotiating several contracts. Interest and financial charges increased from SAR 134 million in Q3 2016 to SAR 159 million in Q3 2017, mainly as a result of the increase in the cost of funding. Q3 2016 Net Results included a SAR 116 million one-off which resulted in reducing Zakat provision that lessened the losses for the period. Q3 2017 losses would be less if that provision was disregarded when compared to the same quarter last year. Total comprehensive loss for Q3 2017 amounts to SAR 174 million compared to a loss of SAR 166 million for the same quarter last year, with an increase in losses by 4.8%. |
| Reasons of increase (decrease) for period compared with same period last year | Net Result for the first 9m in 2017 amounted to a loss of SAR 527.2 million compared to a loss of SAR 143.4 million for the same period in 2016, with an increase in losses by 268%. Despite the loss, the company enhanced its operational cash flow** from SAR 859 million for the first 9m in 2016 to SAR 1,506 million for the same period in 2017, with an increase of 75.3%. The loss was mainly due to the following: Revenues decreased by 12%, at SAR 8,525 million compared to SAR 9,661 million for the first 9m in 2016, mainly due to the erosion of the company base, and the telecom sector in general, in 2016 in particular as a result of: (i) The erosion of the company base due to the implementation of the finger print process during 2016, which shrank the telecom market (ii) The reduction of the interconnection rates since April 2016 (iii) Competitive pricing Gross profit decreased by 13.6% at SAR 4,970 million compared to SAR 5,754 million for the first 9m in 2016, mainly due to the decrease in revenues. EBITDA declined by 12%, reaching SAR 2,735 million (or 32% EBITDA margin) compared to SAR 3,092 million (or 32% EBITDA margin) for the first 9m in 2016, due to the decrease in gross profit, partially offset by the cost optimization through several cost reductions, and savings from re-negotiating several contracts, which helped maintaining EBITDA margin at 32%, despite the decrease in revenues. Interest and financial charges increased from SAR 402 million for the first 9m in 2016 to SAR 516 million mainly as a result of a one-off of SAR 42 million in connection with the implementation of the SAR 7.9 billion refinancing in February 2017, in addition to the increase in the cost of funding. The decrease in Zakat provision by SAR 116 million due to non-recurring transaction in Q3 2016, have positively influenced the net results of the first 9m in 2016. Total comprehensive loss for the first 9m in 2017 amounts to SAR 520.2 million compared to a loss of SAR 145.5 million for the same period last year, with an increase in losses by 258%. |
| Reasons of increase (decrease) for quarter compared with previous quarter | Q3 2017 Net Result witnessed a decrease in losses by 8% when compared to the last quarter, whereas Q3 2017 reported a loss of SAR 174.5 million compared to a loss of SAR 189.7 million in the last quarter. This was mainly due to the following: Revenues slightly decreased by 1.7%, at SAR 2,806 million compared to SAR 2,854 million in Q2 2017, though the company good performance in Hajj season partially offset that decrease. Gross profit slightly increased, despite the decrease in revenues, by 2.4% at SAR 1,672 million compared to SAR 1,633 million in Q2 2017, due to savings as a result of re-negotiating some contracts related to network cost. EBITDA slightly increased by 0.33%, reaching SAR 903 million (or 32% EBITDA margin) compared to SAR 900 million (or 31.5% EBITDA margin) in Q2 2017, due to the increase in gross profit and a decrease of selling and marketing expenses, partially offset by an increase of general and administrative expenses. Interest and financial charges slightly decreased from SAR 163 million in Q2 2017 to reach SAR 159 million in Q3 2017. Zakat charge decreased from SAR 24 million in Q2 2017, to SAR 15 million in Q3 2017, due to the one-off charges that took place in Q2 2017, reflecting the change of regulation related to depreciation. Total comprehensive loss for Q3 2017 amounted to SAR 174 million compared to a loss of SAR 190 million for the last quarter, with a decrease in losses by 8.4%. |
| Reclassifications in quarterly financial results | Certain figures for the comparative period have been reclassified and/or adjusted (to reflect IFRS implementation) to conform to the current period presentation. |
| Other notes | The company has started the execution phase of its new strategy (RISE), which focuses primarily on regaining its brand strength, providing high quality services to its customers, and improving the company operational efficiency. As previously announced, the company has signed three framework agreements with Nokia, Huawei and Ericsson to modernize its mobile network. The company has also launched a range of initiatives aimed at improving sales, marketing and IT. These initiatives are the beginning of the operational phase of Mobily new strategy (RISE), which focuses on providing the best customer experience and a high network quality. Despite the decrease in revenues, the company enhanced its Operational Cash Flow (EBITDA-CAPEX) whereas it amounted to SAR 1,506 million in the first 9m in 2017, compared to SAR 859 million for the same period last year, with an increase of 75%. CAPEX for the first 9m in 2017 were at SAR 1,229 million compared to SAR 2,233 million in the same period last year, reflecting a decrease related to phasing and a certain capitalization of back-log CAPEX related to previous years in the first 9m in 2016. Despite the limited impact of the pilgrimage (Hajj) season on the company net results, the company has achieved great success in the Hajj season this year. Mobily was keen to provide high quality services to pilgrims, and has increased its data capacity in order to improve the quality of the service, as well as providing numerous Wi-Fi access points with high capacity in Minah, Arafat and Muzdalifah. Despite the decrease in revenues in Q3 2017, the company maintained acceptable levels of EBITDA margin at 32%, which reflects the efforts exerted by the company to optimize its operations, in line with the new strategy (RISE). Shareholders equity (no minority interest) at the end of Q3 2017 amounted to SAR 14,435 million compared to SAR 15,027 million at the end of Q3 2016 with a decrease of 3.9%. (*) Restated under IFRS (reviewed by the auditors but unaudited) (**) Operational cash flow = (EBITDA - CAPEX) |
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