* Q3 net up 49.7 percent, beats two analysts
* Stock surges on the news; outperforms sector
* Post-paid accounts for quarter of overall revenue (Adds executive quotes, stock price, analysts)
By Souhail Karam
RIYADH, Oct 19 (Reuters) - Saudi mobile phone operator Etihad Etisalat (Mobily) posted a higher-than-expected rise in net profit on more post-paid voice and broadband customers, pushing its shares up by almost 6 percent.
With voice services penetration well above 100 percent, the kingdom's second-biggest mobile firm will focus on selling more data services to both corporate customers and households to maintain high profit growth, a company executive told Reuters.
Mobily made a record 807 million riyals ($215.2 million) in the three months to Sept. 30, against 539 million riyals a year earlier, beating the most optimistic forecasts by about 10 percent.
"The increase in the net profit during the third quarter stemmed from the continued steady increase in the number of post-paid telephone lines," Mobily said.
The firm also expanded the coverage of the third-generation network to new cities which "helped greatly to add new broadband and data subscribers".
"We are seeing growth across all lines," David Murphy, Mobily's chief marketing officer, told Reuters.
Earnings per share stood at 2.8 riyals compared with 2.63 riyals a year earlier. Operating profit rose 32 percent to 862 million riyals in the three months ending September.
Mobily's shares rose by up to 5.8 percent after the earnings announcement to add to some 31 percent it has gained so far this year which is twice the performance of the telecom's industry's index but slightly below the all-share index.
"Valuation remains reasonable, with the shares trading at 11.2 times and 9.9 times our 2009 and 2010 earnings estimate. We maintain our 'buy' recommendation with a target price of 49 riyals," said Dubai-based Shuaa Capital.
CUSTOMER GROWTH
Murphy said the number of post-paid customers grew 40 percent in the year to end-September, driven by Raqi, or high-end voice service, and growth in wireless handheld devices. Revenue from post-paid now accounts for 25 percent of its overall revenue.
Having more clients on post-paid ensures telecom firms with higher and more sustainable revenues than pre-paid. The majority of Saudi mobile phone users are on pre-paid formula.
Unlike Europe, Saudi mobile users change their handsets too often to make the proposition -- widely applied in Europe and North America -- of offering handsets at subsidised prices in exchange for a one- or a two-year post-paid contract viable here, Murphy said.
"It is also difficult to ensure that the operator gets paid," he added.
The company also raised by about third the number of broadband customers to 800,000 with most of the growth coming from households.
"Now data accounts for 13 percent of our total revenue up from 10 percent at the end of 2008," Murphy said.
With mobile voice services already reaching more than 100 percent of the kingdom's population, data presents Mobily with the strongest growth potential, Murphy said.
"Data is interesting because revenue from it is almost net margin, almost all of its revenue goes to our bottom line ... Data and corporate is the future niche for growth potential".
He added: "We still have a long way to go as penetration is relatively low; off the top of my head I would say about 10 percent, may be a little lower".
Mobily's competitors, Saudi Telecom Co (STC), the Arab world's biggest mobile firm by market value, and Zain Saudi Arabia are expected to post results later this week.
Emirates Telecommunications holds a 27.4-percent stake in Mobily. (Additional reporting by Ulf Laessing; Writing by Souhail Karam; Editing by Natsuko Waki and Rupert Winchester)