Data and corporate segments driving Saudi telecom growth

In its latest update on the Kingdom’s telecom sector, NCB Capital believes that the Kingdom’s strong macro outlook coupled with the government’s increasing expenditures will continue to support growth in the sector. Furthermore, the Saudi telecom sector trades at an attractive 2013e P/E of 9.1x, 9 percent below peers in neighboring countries.

“The broadband and corporate segments remain the primary growth drivers for the sector,” stated Abdulelah Babgi, equity research analyst at NCB Capital. “Increasing competition and change in regulations are the main concerns while the impact of MVNOs is mixed.”

NCB Capital maintains its Overweight call on STC and Mobily, and Neutral rating on Zain KSA. “We continue to prefer Mobily over STC due to its stronger outlook and fewer concerns given its domestic focus versus international exposure at STC,” Babgi stated.

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