Saudi Mobile Subscriptions Shrink On Labour Crackdown, Haj Limits

Nearly 1 million foreign workers, out of roughly 9 million, are estimated to have left Saudi Arabia from March to November 2013 as authorities enforced work permit rules and corporate quotas for employment of local citizens. “The clampdown on illegal workers will have had some effect on operators’ earnings as people leave the country, but it’s likely these were among the lower spending customers,” said Martin Mabbutt, a telecom analyst at HSBC in London. “We don’t know how far through the government is in terms of its drive to remove illegal immigrants from the country.” The financial impact of the crackdown is already being felt in the telecom sector – No.3 operator Zain Saudi posted a widening fourth-quarter loss last week. This missed analysts’ forecasts and marked a deteriorating performance by the Zain affiliate following four straight quarters of narrowing losses. As the smallest operator, Zain Saudi was most vulnerable to the labour crackdown, analysts said. Mobily posted an 8.6 percent rise in fourth-quarter profit, its weakest quarterly profit increase since 2011 and second-weakest quarter since the company broke even in 2006, Reuters data shows. “Mobily warned us the labour crackdown would weaken its revenue,” said Asim Bukhtiar, Riyad Capital head of research.


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