Net operating income rose sharply at Saudi Telecomin 2001, mainly as a result of a 57 per cent increase in revenues from mobile phone subscribers. However, the company's net profit declined because of significant one-off payments to staff in settlement of pension claims and early retirement benefits. The 2001 results were published at the end of May, one month after the release of the company's first set of financial statements since the start of operations as a state-owned corporation in May 1998 (MEED 3:5:02).
The growth in revenues from mobile phones - to SR 7,990 million ($2,131 million) - came on the back of an 84 per cent increase in subscribers to 2.5 million from just under 1.4 million the previous year. Internet subscribers also doubled in 2001 to reach 400,000, and the company introduced a range of new data services. Income from fixed-line subscribers dipped slightly to SR 11,792 million ($3,144 million). The number of fixed lines rose by 9 per cent to 3.2 million, giving Saudi Arabia a teledensity of 15 fixed lines for every 100 inhabitants.
Net operating income for 2001 was SR 5,008 million ($1,335 million), 30 per cent higher than in 2000. Net profit - after zakat and non-recurring items - fell by 12 per cent to SR 3,479 million ($928 million).
Saudi Telecom notes that the sum of SR 794 million ($212 million) was entered into the accounts as a one-off cost of settling claims of 5,559 employees assigned to the company from the Posts, Telegraphs & Telephones Ministry. Saudi Telecom says the amount is equivalent to 50 per cent of the total pension liabilities the company estimates it holds with respect to this group of employees. A council of ministers decree issued in May 2001 gives these employees the option of settling their pension rights according to the civil service pension system, or waiting until a system has been agreed on how to combine the civil service pension with a company pension.
Saudi Telecom has also entered SR 600 million ($160 million) in the accounts as a cost associated with the early retirement programme, which started in 2001.
Saudi Telecom's assets and liabilities at the end of 2001 have been stated at SR 39,170 million ($10,445 million), including share capital of SR 12,000 million ($3,200 million). Preparations are now under way for an initial public offering, expected to take place in the second half of September. Gulf International Bankis the vendor's adviser (MEED 31:5:02).