Saudi Telecom to raise capital by $8 billion with bonus shares

Saudi Telecom Co., the most profitable mobile operator in the Middle East, will increase its capital by 30 billion riyals ($8 billion) through the issuance of bonus shares.

The company, which is controlled by the kingdom’s sovereign wealth fund, plans to issue 1.5 bonus shares for every existing share, through capitalising retained earnings, according to a statement. This will raise STC’s capital to 50 billion riyals, making it the largest capital increase by a Saudi company, Chairman Prince Mohammad bin Khalid Al Faisal said in the statement.

STC also plans to change its dividend policy after the capital increase, committing to a minimum payout of 0.4 riyal per share, from a fixed dividend of 1 riyal a quarter, it said in a separate statement. The company is “still committed to pay 8 billion riyals in dividends per year,” it said.

Sovereign wealth fund -- the Public Investment Fund -- raised $3.2 billion from selling some of its shares in STC last year. The deal was the largest secondary offering in the Europe, Middle East and Africa region in 2021, and left the PIF with a 64 per cent stake in STC.