Telecom Lead Middle East: Saudi Telecom Co. (STC) CEO Khaled al-Ghoneim has stepped down. In Q4 2012, STC reported 79 percent dip in net profit mainly due to its investment in Aircel.

STC appointed Ghoneim in June 2012 following the resignation of his predecessor Saud al-Daweesh two months earlier.

The company did not announce successor to Khaled al-Ghoneim.

In a communication to local stock exchange, STC said its CEO is stepping down. But it did not say that Aircel investment is the reason for the departure of the recently appointed CEO.

STC is also facing the exodus of several senior executives.

Though STC invested heavily for acquisitions in Turkey, Indonesia, Kuwait and Bahrain, in the past decade, it relies on revenue from Saudi business that provided 68 percent of revenue in 2012.

In 2012, STC reported 6.7 percent increase in revenues reaching SR 59.372 billion compared to SR 55.662 billion for the previous year.

The increase in revenues, is attributed to the growth in broadband (fixed & mobile), business and wholesales services domestically and from international operations.

During Khaled al-Ghoneim’s regime, STC net income decreased 79 percent to SR 468 million in Q4 2012 from SR 2.278 billion for the corresponding quarter last year.

In 2012, STC’s net income decreased 4.9 percent to SR 7.350 billion from SR 7.729 billion.

Investment in the Malayasia’s Maxis-owned Aircel resulted into huge losses for STC.

Announcing the Q4 2012 financial result, STC admitted that the decrease in net income for Q4 and 2012 was due to group’s reevaluation of its investments in Cell C, South Africa and Aircel, India during the fourth quarter. Also, due to the change in telecom regulations in India, Binariang group had to take a deferred taxes charge related to Aircel operations, STC group share of these deferred taxes was SR 544 million, and this is also a one-time, non-recurring and non-cash charge.

The new CEO will have a challenging task as STC is in the process of deploying 3G & 3.5G networks to reach various parts of the kingdom. Moreover, it is also expanding 4G network to reach more than 2,500 sites.

Arvind Krishna
[email protected]