Saudi Telecom Co (STC), the Arab world's largest telecom company by market value, posted a 29 percent fall in first quarter net profit, a steeper drop than expected. It made a net profit of SR1.772 billion ($472.5 million) in the three months to end March 31, down from SR2.49 billion in the year-earlier period, it said in a bourse statement. It would distribute SR0.75 per share in dividend. Operating profit in the first quarter fell 39 percent to $2.35 billion year-on-year, STC said. The telecoms firm attributed the drop to a fall in international call prices, a rise in fees related to using external networks and an increase in expenses due to capital investments throughout the group, including establishing new networks and expanding existing ones. “Also, contributing to the drop, is the shrinking of the group's ownership in Malaysia's Maxis due to listing 30 percent on the Malaysian stock exchange,” the company said. Maxis is Malaysia's largest mobile phone service provider. Its $3.3 billion listing last November was Southeast Asia's biggest ever initial public offering. STC said in January it netted SR684 million from the flotation in November of a 25 percent stake in Maxis. In 2007, STC spent $3 billion to take a 25 percent stake in Maxis, a deal that opened markets in Malaysia, Indonesia and India. STC said its mobile subscribers grew by 13 percent to 22 million, while successfully implementing its expansion plans abroad.
