This document summarizes a presentation on analyzing the financial performance of STC Telecom, the largest telecom operator in Saudi Arabia. It includes an overview of the telecom industry in Saudi Arabia, STC's profile, various financial ratios analyzing STC's liquidity, profitability, leverage and efficiency. It also does regression analyses comparing STC and the overall telecom industry performance to the stock market. It concludes with recommendations such as developing better manager selection mechanisms at STC and focusing more on the local market given increasing competition.
9. STC Profile - Largest telecom operator in the MENA region - Over 19,500 employees - 98% coverage of populated areas and highways - 19 million mobile subscribers, 4.1 million fixed subscribers and over 1million Broadband subscribers as at 31stDec. 2008
13. Liquidity Ratios The Current ratio = Current Assets/Current liabilities A part of surplus cash is invested in Murabaha deals with maturity periods of 90 days or less with Several local banks Quick ratio = (current assets-inventories)/current liabilities
14. Net working capital = current assets – current liabilities Cash ratio = (Cash + Marketable securities)/ Current liabilities
15. The profitability Ratios Gross Profit Margin = Gross Profit / Sales Net Profit Margin = Net Income/Sales The increased currency losses and tax provisions were mainly due to increased international operations of STC through its subsidiaries
16. Return on Total Assets = EBIT / Total Assets 1- Increasing competition in the domestic GSM market. Return on Equity = Net Income/Total Equity 2- the increase in the operating expenses.
17. The Payout Ratio = Div./Net Income The Plowback Ratio = 1 – Payout Ratio Growth in Equity = Plowback ratio * ROE
18. HAJJ EFFECT ON PROFITABILITY Mobily vs. STC : 3 million pilgrimages come to SA, Roaming revenues increase
19. The leverage Ratios Equity Multiplier = Total Assets/ Total Equity Debt Ratio = Total Liabilities/Total Assets Debt to Equity = Total Liabilities/ Equity
25. 1- The mechanism of choosing managers, employees in STC must be developed 2- More Focus on the local market 3- I expect Mobily is going to beat STC more on the market share side, taking advantage of the internal systematic problems in STC 4- From 1998 until now, STC monopolizes the Saudi wired line voice operations. The introduction of 3 new fixed line licenses will negatively affect STC’s wired line revenues