Riyadh - Mubasher: NCB Capital maintained their “Neutral” recommendation on Zain with a price target (PT) of SAR 7.6, according to the recent report published by the research firm on Tuesday.
Zain reported a net loss of SAR 267 million in the third quarter of 2016 compared to a to a loss of SAR 223 million in Q3-15 and a loss of SAR 329 million in Q2-16.
Revenues reached SAR 1.63 billion, declining 7.4% year-on-year and 5.4% quarter-on-quarter. This the first y-o-y decline since Q3-14, the report added.
According to NCB Capital, the Saudi telecom provider continues to benefit from the lower MTRs with all-time high margins. However, the ongoing arbitrations with Mobily, increased financing expenses and the SAR 620 million Zakat claim are the key risks.
NCB Capital believes the variance is due to higher than expected impact from the finger print verification initiative and Zain said that the number of subscribers declined by 9.0% to 10.7mn following to the finger print initiative.
The research firm also believes the impact was higher than estimated due to the technical issue with the verification provider which impacted the whole sector.
In October 2016, a royal decree amended the life of Zain KSA’s telecoms license of from 25 years to 40 years. The decree also changed the type of the license to universal from mobile only. Zain began negotiating with a subsidiary of the Saudi Electric Company to use its fiber-optic network.
