Mobily's Q2 Profit Surge and Strategic Capital Allocation: A Case for Long-Term Value in Saudi Arabia's Telecom Sector

In the ever-evolving landscape of global telecommunications, few stories are as compelling as the one unfolding in Saudi Arabia. The Kingdom's telecom sector, once a sleepy market, has emerged as a dynamic engine of growth, driven by Vision 2030's ambition to diversify the economy and digitize every corner of society. At the heart of this transformation is Mobily (Etihad Etisalat Co.), whose Q2 2025 financial results—though not yet fully disclosed—signal a robust profit surge and a disciplined approach to capital allocation. For investors, this raises a critical question: Is Mobily positioned to capitalize on Saudi Arabia's telecom renaissance, or is it merely riding the tailwinds of a broader structural shift?

A Profit Surge Built on Strategic Resilience

Mobily's Q1 2025 performance offers a glimpse into the company's Q2 trajectory. Revenue hit SAR 4.777 billion, up 5.1% year-over-year, while net profit surged 20.2% to SAR 767 million. This growth is underpinned by a 7.5% rise in EBITDA to SAR 1.775 billion and a 12.9% increase in operating profit to SAR 850 million. Crucially, the company's EBITDA margin improved to 37.1%, reflecting operational efficiency gains.

The profit surge is not accidental. It is the result of a strategic pivot toward capital-intensive infrastructure investments and a diversified revenue model. Mobily's CAPEX in Q1 2025 reached SAR 2.13 billion, a 850% jump from Q1 2024, driven by spectrum acquisitions and 5G network expansion. These investments are not just about short-term gains—they are about securing long-term market dominance in a sector where 5G adoption is accelerating at a rate of 10 percentage points annually.

Strategic Allocation: Building for the Future

Mobily's capital allocation strategy is a masterclass in balancing short-term profitability with long-term value creation. The company has prioritized spectrum licenses, which are critical for 5G deployment, and enterprise solutions, a segment expected to grow at 15% annually through 2030. By investing in data centers and submarine cables—a $905 million bet—it is positioning itself as a key player in Saudi Arabia's digital infrastructure.

This approach contrasts with peers who have focused narrowly on consumer markets. Mobily's Open RAN 5G partnership with Ericsson, for instance, is a forward-looking move to future-proof its network against rising demand for IoT and AI-driven services. The company's CAPEX is also aligned with Saudi Arabia's Shareek program, which aims to unlock $5 trillion in private-sector investments by 2030.

A Sector in the Midst of Disruption

Saudi Arabia's telecom sector is undergoing a seismic shift. The government's push for Mobile Number Portability (MNP) has intensified competition, forcing operators to innovate. Meanwhile, the rollout of 5G—now covering 78% of the population—has created new revenue streams in areas like telemedicine, smart cities, and remote education.

Mobily's ability to navigate this disruption is evident in its customer-centric strategies. The company has outperformed rivals in customer satisfaction metrics, a testament to its focus on service quality and digital engagement. Its recent foray into enterprise solutions, including cloud services and AI-powered analytics, is a strategic move to tap into the $10 billion digital economy segment.

Risks and Rewards in a High-Stakes Game

Investors must weigh the risks. The telecom sector is capital-intensive, and Mobily's aggressive CAPEX could strain liquidity if revenue growth lags. Additionally, regulatory shifts—such as potential spectrum license auctions or pricing controls—could impact margins. However, these risks are mitigated by the sector's structural tailwinds.

Saudi Arabia's telecom sector is projected to grow at 6% annually through 2030, driven by Vision 2030's digital infrastructure goals. Mobily's 20% EBITDA margin and 5.1% revenue growth in Q1 2025 suggest it is well-positioned to outperform in this environment.

The Investment Case: A Long-Term Play

For long-term investors, Mobily represents a compelling opportunity. Its strategic CAPEX, aligned with Saudi Arabia's digital transformation, positions it to capture a significant share of the $15 billion telecom market by 2030. The company's focus on sustainability and CSR—including talent development and digital literacy initiatives—further strengthens its social license to operate in a market where public perception is increasingly important.

Moreover, Mobily's financial discipline is evident in its debt-to-equity ratio of 0.8, which is among the lowest in the sector. This provides a buffer against economic volatility and ensures the company can continue investing in growth.

Conclusion: A Telecom Sector in Motion

Mobily's Q2 2025 profit surge is more than a quarterly anomaly—it is a reflection of the company's strategic foresight and the broader momentum in Saudi Arabia's telecom sector. As the Kingdom accelerates its digital transformation, Mobily's investments in 5G, enterprise solutions, and infrastructure will likely translate into sustained value creation. For investors, the question is not whether to bet on the sector, but whether to trust the operator. In Mobily's case, the answer seems clear.

Final Call to Action: Investors seeking exposure to Saudi Arabia's telecom renaissance should consider Mobily as a core holding, given its disciplined capital allocation, market-leading EBITDA margins, and alignment with Vision 2030. However, close attention to regulatory developments and CAPEX efficiency will be critical in the years ahead.