Saudi Telecom: Comprehensive Analysis of Stock Performance and Financial

Saudi Telecom Company (STC) was established in 1998 following the privatization of the telecommunications sector, and it is now the largest provider of telecommunications services in the Kingdom of Saudi Arabia. The company operates in the field of wired and wireless communications, offering a wide range of services including mobile phone, home internet, business services, and digital solutions. STC is considered the backbone of the Saudi telecommunications sector, as its network covers all regions of the Kingdom and serves millions of customers from individuals and businesses. The company is listed on the main market index (TASI) and is among the large-cap stocks, giving it significant weight in movements within the Saudi financial market. The Saudi government holds a substantial indirect stake in it through the Public Investment Fund, reflecting the company's strategic importance and its pivotal role in achieving the goals of the Kingdom's Vision 2030, especially concerning digital transformation and the development of the local digital economy. STC has expanded regionally through investments in telecommunications companies outside the Kingdom, enhancing its position not only locally but also regionally. This geographical and service diversity makes Saudi Telecom a key player in the national economy and the Saudi financial markets.

Saudi Telecom's stock (STC) trades on the Saudi Tadawul under the symbol 7010 and is among the most important stocks in the market in terms of liquidity and volume. At the end of December 2024, the stock price was approximately 42.38 Saudi Riyals, according to data from Argaam. This price reflects a slight increase from the previous session and indicates relative stability in the stock's performance in recent times. The company's market value reached about 213.3 billion Saudi Riyals, making it one of the largest listed companies by market capitalization. This large size gives the stock particular appeal to institutional investors and sovereign funds, reflecting market confidence in the company's strength and financial stability. It is noteworthy that the stock's movement is influenced by several factors, including quarterly financial results, cash dividends, economic forecasts, overall sector performance, as well as regulatory developments and competition within the market. Despite strong competition, STC's stock has maintained its position among the leading stocks in the Saudi market over the past years.

The price-to-earnings (P/E) ratio is one of the most important indicators used by investors to assess the attractiveness of Saudi Telecom's stock. The company's current P/E ratio is estimated to be between 12 and 15 times, which is within the sector average, indicating a balanced valuation of the company compared to its local and international competitors. This indicator reflects the relationship between the stock price and the company's profitability; the more moderate the ratio, the more attractive the stock becomes to investors seeking relative stability. As for the dividend yield, it reached about 4% annually based on the 2023 distributions (1.68 Riyals per share) and the current stock price (~42 Riyals). This yield is relatively high in the Saudi market and highlights the company's commitment to a regular and attractive dividend distribution policy. The dividend yield is a key element in the company's strategy to attract investors seeking stable income from their investment portfolios. These indicators suggest the company's strong financial position and its ability to achieve stable profits and distributions over time.

Saudi Telecom announced strong results for the third quarter of 2024, as the company continued to achieve stable growth in revenues and net profit compared to the same period last year. Quarterly revenues exceeded 12 billion Saudi Riyals, reflecting a slight increase over the third quarter of 2023. Net profit reached approximately 3.8 billion Riyals, representing an annual growth of about 5%. These results reflect the continued growing demand for data and internet services, especially with the expansion of 5G networks and increased use of digital solutions. The expansions in the business sector, cloud services, and cybersecurity products also contributed to revenue growth. The company also maintained strong profit margins due to effective cost management and its strategy of diversifying income sources. These results reflect STC's ability to adapt to competitive challenges and seize new growth opportunities in a rapidly evolving market.

The telecommunications and information technology sector in Saudi Arabia is witnessing significant transformations, driven by the government's adoption of digital transformation projects under Vision 2030. The sector is one of the fastest-growing and most dynamic, forming the essential infrastructure for digital services, e-commerce, and smart cities. Among the prominent opportunities available are the spread of 5G networks that enable ultra-fast internet speeds and support Internet of Things applications, increased investments in fiber optics, and the expansion of digital financial services and financial inclusion. Conversely, the sector faces challenges, including heightened competition among major operators, regulatory pressures, and the ongoing need to renew and expand infrastructure. Additionally, rapid technological transformations require substantial investments in network upgrades and the development of advanced solutions such as artificial intelligence and cloud computing. Nevertheless, Saudi Telecom remains in a leading position thanks to its financial and technical capabilities and its strategy to keep pace with global trends in the sector.

Saudi Telecom faces strong competition from several major companies in the local market, most notably Mobily (Etihad Etisalat), Zain Saudi Arabia, and virtual telecom companies such as Virgin Mobile and Ultra. STC holds a larger market share in mobile and fixed telecommunications, distinguished by a broader coverage network and diverse services for individuals and businesses. Mobily is the second-largest operator, providing mobile and internet services, while Zain Saudi Arabia focuses on innovation in digital services. Virtual telecom companies (MVNOs) offer competitive alternatives at flexible prices, but still represent a small share of the market. STC's strengths lie in its large size, ability to invest in infrastructure, international partnerships, and diverse income sources. However, competition remains a significant factor in determining prices and service quality, prompting STC to continue developing its offerings and improving customer experience to maintain its leadership.

Saudi Telecom aims to be at the forefront of companies achieving digital transformation in the Kingdom and the region. Its strategy focuses on expanding 5G network coverage, investing in fiber optic infrastructure, and providing innovative solutions in cloud computing, the Internet of Things, and cybersecurity. The company has launched advanced digital services for individuals and businesses, such as STC Pay, which enhances financial inclusion and provides integrated electronic payment solutions. It has also established strategic partnerships with global technology companies like Microsoft and Google Cloud to contribute to the development of local cloud data centers and enhance Saudi Arabia's position as a regional hub for cloud computing. STC also aims to diversify its income sources by investing in emerging technologies and expanding its regional and international presence through investments and partnerships in neighboring markets. This strategy reflects the company's commitment to keeping pace with technological changes and achieving long-term financial sustainability.

Saudi Telecom witnessed a number of significant events and developments during 2024 and 2025 that enhanced its position in the market. Among the most important of these developments are: signing strategic partnerships with global companies such as Microsoft and Aramco to establish advanced cloud data centers, and collaborating with Google Cloud to enhance the digital infrastructure in the Kingdom. The company launched new products and services in the fields of the Internet of Things, cybersecurity, and smart cities, in addition to expanding digital financial services through STC Pay. The company maintained a generous dividend distribution policy, announcing strong cash distributions to shareholders in various quarters of 2024. It also focused on implementing projects to expand the fiber optic network and prepare for participation in new government projects. The company also invested in updating customer service systems and adopting artificial intelligence solutions to improve user experience. These developments affirm the company's dynamism and readiness to meet market demands and customer aspirations in the future.

Saudi Telecom is characterized by a regular and attractive dividend distribution policy for shareholders, which gives the stock a defensive nature and makes it a focal point for investors seeking stable income. In 2023, the company distributed total cash dividends of 1.68 Riyals per share, equivalent to an annual yield of about 4% at the current stock price. In 2024, the company continued its commitment to regular distributions, announcing distributions of 1.56 Riyals per share for the second half of 2023. This policy reflects the company's strong cash flows and its ability to achieve sustainable profits. These distributions also give investors confidence in the stock's stability, especially amid fluctuations in financial markets. It is important to note that the distribution policy is subject to internal considerations such as realized profits, investment requirements, and the company's overall financial policy, as well as general economic conditions.

The performance of Saudi Telecom's stock is influenced by several key factors, including quarterly and annual financial results, regulatory developments in the telecommunications sector, and increasing competition in the local market. Government trends in investing in digital infrastructure and adopting modern technologies also play a pivotal role in supporting demand for the company's services. On the other hand, changes in the macroeconomic environment, such as economic growth rates and household and corporate spending, affect subscription rates and revenues. Additionally, news about international partnerships, new projects, and cash dividend policies contribute to stimulating stock movement in the market. Furthermore, government participation through the Public Investment Fund provides additional support for the stock in terms of stability and confidence. Conversely, intense competition or unexpected regulatory decisions may put pressure on profit margins, necessitating constant monitoring of influencing market factors.

Saudi Telecom plays a pivotal role in achieving the goals of Vision 2030, particularly concerning digital transformation and enhancing the knowledge economy. The company has contributed to building and developing a modern digital infrastructure that supports e-government services, digital commerce, and smart cities. STC has invested heavily in deploying 5G networks and fiber optics, enabling the Kingdom to achieve significant progress in regional and international digital infrastructure indicators. The company has also launched initiatives for digital education, e-health, and the development of Internet of Things solutions, enhancing the Kingdom's position as a regional hub for digital innovation. STC also contributes to supporting financial inclusion through STC Pay solutions and providing advanced electronic payment services. These efforts reflect the company's commitment to keeping pace with global trends and its effective contribution to achieving national transformation strategies and sustainable development.

In addition to its strong presence in the local market, Saudi Telecom has invested in regional and international telecommunications companies to enhance its income sources and diversify risks. STC holds stakes in companies in Kuwait, Bahrain, and East African countries, and participates in numerous international projects in the field of submarine cables and digital infrastructure. These investments aim to capitalize on growth opportunities in emerging telecommunications markets and enhance the company's position as a leading regional provider. These expansions also support the company's strategy to diversify income sources and achieve long-term financial sustainability. On the other hand, international experiences allow the company to keep pace with the latest technological developments and apply best practices in network and digital service management. These steps enhance STC's competitiveness at the regional and international levels.

Given the complexity of financial markets and the multitude of factors affecting stock performance, it is essential for investors to consult a licensed financial advisor before making any investment decision regarding Saudi Telecom's stock or any other listed stocks. A financial advisor helps analyze investment goals, assess risks, and monitor relevant financial and economic developments. They also provide investors with updated and neutral information about company and stock performance, helping them make informed decisions that align with their financial needs and long-term goals. It is always important for investment decisions to be based on accurate knowledge of financial data, fundamental indicators, and the company's dividend policy, in addition to understanding future sector trends. Our constant reminder of the importance of consulting specialists reflects our commitment to protecting investors and helping them achieve their goals within a safe and organized investment environment.