Saudi Telecom Co (STC), the Gulf's biggest telecom operator by market value, blamed rising costs as it posted an 8.7 per cent fall in second-quarter profit on Wednesday to extend a profit slump and miss analyst estimates.

The firm, which competes domestically with Etihad Etisalat (Mobily) and Zain Saudi, made a net profit of SAR2.56 billion ($683 million) in the three months to June 30, down from SAR2.80 billion ($746 million) in the prior-year period, according to a bourse statement.

Analysts polled by Reuters had on average forecast STC, which owns stakes in operators in the Gulf, Turkey, South Africa and Asia, would make a quarterly profit of SAR2.94 billion ($783 million).

STC said general and administrative costs, plus amortisation and depreciation costs, rose by a combined SAR246 million ($65.6 million) in the second quarter, while taxes and employee retirement payouts together increased SAR178 million ($47.46 million).

Quarterly revenue grew 4.3 per cent to SAR12.22 million ($3.26 million).

STC reported falling profits in two of the preceding three quarters, stalling an improvement in its bottom line that had been due to trimming its international ambitions and refocusing on its lucrative home market.

In February, the telecommunications regulator announced it would cut interconnection costs, a move seen helping loss-making number three player Zain Saudi win market share. - Reuters