* STC Q3 profit 2.15 bln riyals, down 7.5 pct
* Mobily reports wider Q3 loss of 167.7 mln riyals
* Impact of govt fingerprinting scheme weighs on both
(Recasts, combines STC/Mobily earnings news, adds context)
By David French
DUBAI, Oct 19 Saudi Arabia's two biggest telecom
operators reported weaker third-quarter earnings on Wednesday,
as the cost of implementing a government initiative to register
fingerprints with phone numbers weighed on both providers.
A 7.5 percent drop in profit at market leader Saudi Telecom
Co's (STC) represented a continuation of an earnings
slump which has now seen it report falling profits in eight of
the last nine quarters.
Meanwhile, number two operator Etihad Etisalat's
(Mobily) recovery from an accounting scandal was halted as
revenue and subscriber numbers tumbled in the three months to
Sept. 30 due to the state scheme.
Under the Communications and Information Technology
Commission rules announced last year, all SIM cards issued in
Saudi Arabia must be linked to a fingerprint record held at the
National Information Center, part of the Ministry of Interior.
Unregistered lines would begin to be disconnected from July
20, according to information on STC's website. The initiative is
aimed at stopping people obtaining mobile phones by using
fraudulent identification cards, according to press reports.
STC, which owns stakes in operators in the Gulf, Turkey and
Asia, blamed a 1.16 billion riyal increase in service costs
linked to the scheme for its disappointing earnings performance.
It did not state the percentage which this gain represented.
Net profit slipped to 2.15 billion riyals ($573.2 million)
in the three months to Sept. 30 from 2.32 billion riyals in the
prior-year period, a bourse statement said.
The earnings figure was in line with the average forecast of
six analysts polled by Reuters.
The hike in costs overshadowed a 6 percent increase in
consolidated revenues, which represented an improvement of 603
million riyals. No total figure was provided.
For Mobily, the fingerprinting initiative helped cause a
20.8 percent year-on-year slump in third-quarter revenue to 2.93
billion riyals, as the costs of implementing the scheme combined
with the reduction in subscriber numbers as unregistered lines
This resulted in a net loss for the affiliate of the United
Arab Emirates' Etisalat of 167.7 million riyals in the
three months to Sept. 30, compared with a loss of 158.3 million
riyals in the prior-year period, a bourse statement said.
Five analysts polled by Reuters had forecast Mobily would
make a quarterly net profit of 15.06 million riyals.
Mobily had made three straight quarterly profits prior to
the latest period as it recovered from a series of earnings
restatements that in total cut 27 months of profits to March 31,
2015, by 3.63 billion riyals.
The third telecom operator, Zain Saudi Arabia, reported on
Monday its subscriber base fell 9 percent to 10.7 million on the
back of the fingerprinting scheme, although it attributed its
widening net loss to cuts in termination rates.
STC did not provide any detail on subscriber numbers in its
($1 = 3.7510 riyals)
(Additional reporting by Tom Arnold; Editing by Adrian Croft)