Riyadh-Mubasher: Low oil prices and potential spending cuts are negatively impacting the Saudi economy. However, the telecom sector outlook remains resilient, due to its defensive nature, NCB Capital (NCBC) said in a recent report.
The sector’s net income is expected to grow 48.6% year-on-year in 2016, driven by cost optimisation from Saudi Telecom Co. (STC) and Mobily’s return to profitability.
STC remains NCBC’s only pick (price target: SAR 79.0), boosted by strong fundamentals and attractive dividend outlook.
The research firm reinstated its ‘Neutral’ recommendation on Zain (price target: SAR 10.7) as the potential risks outweigh the relative improvement in performance.
NCBC maintained its ‘Under Review’ rating on Mobily, due to the outlook uncertainty.
