Saudi Telecom Co. is primed for more super-fast growth through 5G
There are consistent gains that STC can plug into from its home market - and overseas too
The Saudi Telecom Group, which holds the highest market cap in MENA, has roughly 100 million subscribers worldwide. It offers a 158,000 km fibre-optic network that connects Asia, the Middle East, and Europe.
STC runs the most extensive mobile network in the Middle East, providing 4G broadband to around 85 per cent of the Saudi population and covering 99 per cent of its populous areas. STC’s investments include 100 per cent ownership in Viva Bahrain, 51.8 per cent stake in Viva Kuwait, 35 per cent stake in Oger Telecom, which controls Turk Telecom, Avea in Turkey, Cell-C in South Africa, and 25 per cent stake in Binariang GSM Holding in Malaysia, which owns Maxis in Malaysia.
STC’s operations in the Middle East are supported by various underlying investments in IT, content, distribution, contact centres, and real estate.
Ringing in steady growth
Compared to the first nine months of 2021, STC had an 8.22 per cent increase in net profit after zakat and tax of SR9.41 billion. In 2022, revenues climbed 6.48 per cent year-on-year to SR50.39 billion from SR47.33 billion. In 9M-2022, earnings per share were SR1.89, up from SR1.74 for the year before.
Net earnings in the third quarter of 2022 of SR3.54 billion represents an increase of 21.10 per cent from SR2.92 billion. STC declared interim cash dividends for Q3-22 totalling SR1.99 billion, increasing it by SR0.40 per share, or 4 per cent of the nominal value of each share. This increase was due to profit growth and contributed to shareholders receiving stable returns.
Calling 5G
The Saudi Arabian telecom market was estimated to be worth $13.9 billion in 2021, and between 2022-26, it is expected to expand by 5 per cent annually. The development of the 5G mobile network will be the driving force behind this growth.
In contrast to the global average of 53 per cent, the Communications and Information Technology Commission (CITC) reported that 93 per cent of the Saudi population has internet access.
With 69 per cent of the population under 40 years, the country’s demographics indicate increased demand for STC’s services. Additionally, it is projected that 5G would create new investment opportunities.
In 2021, STC was the market leader in pay-TV, fixed voice, fixed broadband and mobile. It is predicted to continue to hold the top spot thanks to its intense focus on 5G network expansion. The constant expansion of subscriptions for smartphones and multiple SIM cards will help to support the company’s further gains.