Earnings Report /
Saudi Arabia

Mobily: Earnings Call Summary

  • Mobily revenue increased(+2.3% qoq) to SAR3.9bn in Q2 22. This is the highest quarterly revenue in the last seven years.

  • Net debt reached SAR11.97bn in Q2 22 vs SAR13.04bn in Q2 21

  • With the increase in pilgrim numbers during the Hajj season, Mobily’s 5G coverage areas increased by 125%

SNB Capital
31 July 2022
Published bySNB Capital

Revenue and profitability

·         Mobily revenue increased 4.6% yoy (+2.3% qoq) to SAR3.9bn in Q2 22. This is the highest quarterly revenue in the last seven years.

·         The growth in revenue is attributed to 1) growth in wholesale and business segments and 2)improvement in FTTH active subscribers and overall subscribers base.

·         Product innovation, digital solutions, and new projects helped the Business unit to post strong revenue growth.

·         EBITDA increased 10.3% yoy (+2.6% qoq) to SAR1.48bn in Q2 22 while EBITDA margins improved to 38.0% from 36.1% in Q2 21. The improvement in EBITDA margins is driven by top-line growth and the ongoing operational efficiency measures.

·         Net Income grew 47.5% (+12.7% qoq) to SAR360mn in Q2 22, its highest level in 7 years. This is driven by healthy revenue growth coupled with EBITDA margin improvement and disciplined cost management.

Capex

·         Capex in Q2 22 increased by 18.2% yoy (+45.3% qoq) to SAR319mn, while capex intensity ratio stood at 8.2% in Q2 22 compared to 7.2% in Q2 21.

·         The increase in capex was driven by continued 5G roll out, investment on IoT infrastructure, data centers and IT transformation.

·         To sustain the growth momentum, the company will continue to invest in data centers, submarine, 5G network, FTTH/FTTX.

·         The company expects capex to pick-up in the coming periods. Capex to sales ratio is expected to be in the average range of 14% to 17%.

Cashflow and debt:

·         Operational cashflow (EBITDA-Capex) increased 8.3% yoy (-5.1% qoq) to SAR1.16bn vs SAR1.07bn in Q2 21. Solid growth in EBITDA slightly offsets the increase in capex.

·         Mobily’s continued to deleverage the balance sheet as the company reduced its debt balance by more than SAR1.0bn in the last 12 months.

·         Net debt reached SAR11.97bn in Q2 22 vs SAR13.04bn in Q2 21, while net debt to EBITDA ratio stood at 2.06x vs 2.40x at the end of Q2 21.

·         Despite a decline in debt, finance costs increased by 14.5% yoy to SAR143mn mainly due to the increase in SAIBOR rates.

·         The company will continue to deleverage the balance sheet and aims to achieve a target Debt/EBITDA of 1.5x-2.0x.

·         The company expects that its hedging strategy and fixed interest rates loans will partly mitigate the impact of interest rate hikes.

Others

·         With the increase in pilgrim numbers during the Hajj season, Mobily’s 5G coverage areas increased by 125% and 5G data traffic increased by 225% vs 2019 Hajj season.

·         The company recorded a 130% growth in voice calls and 75% growth in international calls compared to the 2019 Hajj season. This helped Mobily to increase its roaming revenue.

·         With Mobily Pay, the company aims to provide complete financial digital solutions and will continue to invest in it to improve its market share.

·         The company believes that  Mobily Pay has an enormous addressable market with a strong growth potential. Mobily aims to capture a sizeable market share with innovative offerings.

·         Commenting on the mid-term revenue growth, the company stated that digital revenue streams such as wireless and cloud-based services, 5G and FTTH will also support the future revenue growth.