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Graduation Presentation

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After finishing my CO OP with KPMG under Saudi Telecom contract, I had to give my vision to KFUPM as a student about STC and the telecom market in Saudi Arabia

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Graduation Presentation

  1. 1. Financial Analysis for
  2. 2. Agenda Of The Presentation <ul><ul><li>KPMG contract with STC </li></ul></ul><ul><li>Telecom Industry In SA </li></ul><ul><li>STC Under Focus </li></ul><ul><li>STC Financial Analysis </li></ul><ul><li>Recommendations </li></ul>
  3. 3. <ul><ul><li>Report on Revenue Leakage </li></ul></ul><ul><ul><li>Completion of Billing cycle report. </li></ul></ul><ul><ul><li>Policies and procedure manual. </li></ul></ul><ul><ul><li>Job descriptions. </li></ul></ul><ul><ul><li>Roles and responsibilities. </li></ul></ul><ul><li>KPMG contract Included : </li></ul>
  4. 4. Telecom Industry In SA
  5. 5. Telecom Industry In SA Expected Expansion.. Initial approval for 3 additional operators that is expected to go public via an IPO
  6. 6. Telecom Industry In SA
  7. 7. STC UNDER FOCUS
  8. 8. <ul><li>“ As leaders in a world of constant change, we strive to exceed our customers 'expectations so that, together, we reach new horizons” </li></ul>STC UNDER FOCUS Honesty Respect Commitment Initiative Cooperation Loyalty Mission: Values:
  9. 9. STC Profile - Largest telecom operator in the MENA region - Over 19,500 employees - 98% coverage of populated areas and highways - 19 million mobile subscribers, 4.1 million fixed subscribers and over 1million Broadband subscribers as at 31stDec. 2008
  10. 12. Financial Analysis
  11. 13. Liquidity Ratios The Current ratio = Current Assets/Current liabilities A part of surplus cash is invested in Murabaha deals with maturity periods of 90 days or less with Several local banks Quick ratio = (current assets-inventories)/current liabilities
  12. 14. Net working capital = current assets – current liabilities Cash ratio = (Cash + Marketable securities)/ Current liabilities
  13. 15. The profitability Ratios Gross Profit Margin = Gross Profit / Sales Net Profit Margin = Net Income/Sales The increased currency losses and tax provisions were mainly due to increased international operations of STC through its subsidiaries
  14. 16. Return on Total Assets = EBIT / Total Assets 1- Increasing competition in the domestic GSM market. Return on Equity = Net Income/Total Equity 2- the increase in the operating expenses.
  15. 17. The Payout Ratio = Div./Net Income The Plowback Ratio = 1 – Payout Ratio Growth in Equity = Plowback ratio * ROE
  16. 18. HAJJ EFFECT ON PROFITABILITY Mobily vs. STC : 3 million pilgrimages come to SA, Roaming revenues increase
  17. 19. The leverage Ratios Equity Multiplier = Total Assets/ Total Equity Debt Ratio = Total Liabilities/Total Assets Debt to Equity = Total Liabilities/ Equity
  18. 20. Efficiency Ratios Assets Turnover = Sales / Average Total Assets
  19. 21. Comparison between STC, Telecom Industry and Tadawul Regression Analysis
  20. 22. STS Regression vs. TASI SUMMARY OUTPUT Regression Statistics Multiple R 0.567966 R Square 0.322586 Adjusted R Square 0.320557 Standard Error 1.341974 Observations 336 ANOVA   df SS MS F Significance F Regression 1 286.4344 286.4344 159.0513 4.31944E-30 Residual 334 601.4983 1.800893 Total 335 887.9327         Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept -0.12631 0.073395 -1.72091 0.086193 -0.27068233 0.01806835 -0.270682334 0.01806835 X Variable 1 0.692213 0.054887 12.61155 4.32E-30 0.584245201 0.80018173 0.584245201 0.80018173
  21. 23. Telecom Industry's Regression vs. TASI SUMMARY OUTPUT Regression Statistics Multiple R 0.774565529 R Square 0.599951759 Adjusted R Square 0.59875401 Standard Error 0.731796062 Observations 336 ANOVA   df SS MS F Significance F Regression 1 268.2443414 268.2443 500.8993 2.0072E-68 Residual 334 178.8655093 0.535525 Total 335 447.1098506         Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept -0.034387424 0.040023445 -0.85918 0.390856 -0.11311722 0.044342 -0.1131172 0.04434237 X Variable 1 0.66987345 0.029930746 22.38078 2.01E-68 0.61099692 0.72875 0.61099692 0.72874998
  22. 24. Recommendations & Conclusion
  23. 25. 1- The mechanism of choosing managers, employees in STC must be developed 2- More Focus on the local market 3- I expect Mobily is going to beat STC more on the market share side, taking advantage of the internal systematic problems in STC 4- From 1998 until now, STC monopolizes the Saudi wired line voice operations. The introduction of 3 new fixed line licenses will negatively affect STC’s wired line revenues
  24. 26. Thank you for listening
  25. 27. Q & A

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