Qatar Telecommunications Co (Qtel) posted its second straight decline in quarterly profit, at the bottom end of forecasts, as financing costs surged after it borrowed $5 billion to pay for acquisitions.
Profit attributable to shareholders in the third-quarter fell 5.6 percent after Qtel's financing costs swelled to 310.07 million riyals ($85.23 million), compared with 3.21 million riyals a year earlier, Qtel said in a statement.
Qtel, the fifth-largest Gulf Arab telecom firm by market value, raised a $3 billion loan that closed this month to refinance debt taken for its $3.72 billion takeover in March of Kuwait's National Mobile Telecommunications Co.
The additional financing which we have done for Wataniya has had an impact on our results," Qtel executive director for group communications Adel Al-Mutawa said. "We are looking at this as the investment phase," Mutawa said.
Profit in the three months ended Sept. 30 was 412.20 million riyals, or 4.12 riyals per share, compared with 436.49 million riyals, or 4.36 riyals per share, in the year-earlier period.
Wataniya's contribution to Qtel's profit in the quarter covered less than half of Qtel's debt financing costs. The Kuwaiti mobile phone firm, in which Qtel holds a 51 percent stake, contributed about KD10.94 million ($39.61 million) during the quarter. Wataniya's quarterly profit fell 27.2 percent in the three-month period to KD15.61 million.
Analysts' forecasts for Qtel's quarterly profit ranged from 430 million riyals and 725 million riyals in a Reuters net profit survey in September.
Qtel is expanding outside its domestic market as Qatar prepares to sell a second mobile phone license this year, ending the last Arab telecom monopoly. Its revenues more than doubled in the quarter to 2.56 billion riyals, compared with 1.08 billion riyals in the year-earlier period.
In addition to financing charges, third-quarter general and administrative expenses rose to 988.43 million riyals, from 366 million riyals a year earlier, Qtel said. "The losses will start to decline going forward as our international operations grow," Mutawa said. Total customers jumped to 14.2 million at the end of September, compared with 1.3 million a year earlier, Qtel said.
This included 1.1 million customers in Qatar, 897,000 in Oman through its unit Nawras, and 8.2 million subscribers through Wataniya, which operates in Kuwait, Saudi Arabia, Tunisia, Algeria and the Maldives. Nawras expects to make its first profit in the fourth quarter, Chief executive Ross Cormack told Reuters in September. Qtel bought 75 percent of Pakistan's Burraq Telecom with a Saudi partner this year and its affiliate, Asiacell, runs a network in Iraq.
Our investments are long-term investments in markets with low penetration," Mutawa said. There could be more acquisitions in the Middle East, North Africa and Asia, he said. Qtel took out two loans totaling $4.5 billion in March to pay for acquisitions, including its January purchase of a 25 percent stake in Asia Mobile Holdings Pte Ltd, a unit of Singapore's Technologies Telemedia.
It raised this to $5 billion this month. - Reuters