3 factors put telecommunications companies at tough choices

Competition and changing of consumers habits and low prices
3 factors put telecommunications companies at tough choices

         The telecommunications sector is going through a critical period in the Kingdom force it to be subject to tough choices, as a result of competition that happened between the operating companies and the changing consumers habits in the era of the Internet and systems that led to lower call rates.
And the competing companies are considering new options for facing the challenges of the market under the decline in profits they go through since the beginning of this year, due to higher operating expenses, and the additional expenses in spending on network infrastructure and the cost of the new requirements for documenting the stamping and the increase in financing costs.
The " economy " magazine in its edition for August has shed light on what is happening in the international and local telecommunications markets, and on the difficult challenges that could push companies to choose between two options, either restructuring with the market needs, or following the example of European telecommunications companies that turned to interaction recently, to share the burden of rising costs with each other in time of  returns declining, "the economy" said that the amount of transactions witnessed by the European telecommunications sector is estimated at $ 67 billion during the first half of 2016, most notably the completion of the "BT Group" company specialized in the operation of broadband in Britain, the purchase of "IEEE" the largest telecommunications companies in England, Inc. "Hocheson Wampoa" of Hong Kong has accepted to buy "02" company that is working in the operation of mobile phones from the Spanish company "Telefonica" for $ 32.8 billion.
In Italy, the company "Hocheson" negotiating with "Vimpelcom" for Dutch Telecom, aiming of a partnership between the two companies in Italy branch, and the two companies are looking to reach an agreement before the end of this year.
the "economy" asked, is the Saudi telecom market witnessing an interaction soon, especially under the declining of profits, as the Saudi Telecom recently has declined in the quarterly profit recorded by 27.1 percent in the profit for the second quarter of 2016. The company referred the decline to the higher service returns compared to the same quarter of the previous year, also the higher operating expenses during the second quarter due to higher sales and marketing expenses, higher general and administrative expenses, higher consumption, and higher total expenses and other incomes.
Saudi "Zen" Telecom has continued to improve its returns and the gross profits during the second quarter of 2016, compared with the same period of the previous year. Where returns of $ 1.727 million during the second quarter of this year recorded an increase of 5 percent, compared to 1.649 million during the same quarter of 2015, the returns during the six-month period  have rising by 6 per cent to 3.492 million riyals, compared to 3.306 million during the same period of the previous year.
The company also succeeded in achieving a total record profit during the quarter amounted to 1.113 million riyals profit of 64 per cent, recording a rise of 17 percent compared with 949 million riyals in the second quarter of last year profit, estimated at 58 percent, also the gross profit increased by 21 per cent during the first half of this year to 2.198 million compared to 1.824 million during the same period of the previous year.
The company has recorded profits before financing charges, taxes, consumption "EBITDA" in the second quarter amounted to 372 million riyals, while it recorded 817 million riyals on the six months level, compared with 782 million riyals in the same period of 2015. While the company achieved a profit, " EBITDA Margin " that reached 22 percent in the second quarter and 23 percent over the six months, the company recorded during the first half of 2016  results in both returns and gross profit and profit margin, which is the highest since the foundation.
Atheeb Telecom "GO" total loss for the month of June 2016 in an amount of 22.23 million riyals, and the accumulated losses of the company of 73.67 percent of the paid capital, the total shareholders is of $ 414.77 million riyals. While the total assets in June 30, 2016  was amounted to 1.675.50 million riyals, "Mobily" company is the exception to the phenomenon of declining operating in the Kingdom telecommunications companies after achieving a profit in the second quarter of 2016 amounted to 18.8 million riyals, compared to a loss of 901 million riyals for the same quarter of 2015, the profit in the first six months of 2016 amounted to 35.4 million riyals compared to the loss of 945.4 million riyals for the same 2015 period, the reason for this transformation as a result of  the containment of the increase in operating expenses. In addition to the  influenced by the results of the same period of the previous year negatively to specify an additional portion for the doubtful debts.

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