STC: Comprehensive Analysis of Financial and Operational Performance in Saudi

STC (Saudi Telecom Company) was established in 1998, following the merger of the government telecommunications sector and its transformation into a public joint-stock company. The stock was listed on the Saudi financial market (Tadawul) in 2003, becoming one of the pillars of the Saudi market. Since its inception, STC has sought to develop fixed and mobile telecommunications services, focusing on expanding digital infrastructure and providing advanced technological solutions. The Public Investment Fund is the main owner of the company, holding over 60%, alongside other shareholders from the public and private sectors. The company has played a pivotal role in implementing Saudi Vision 2030 for digital transformation, both in supporting infrastructure and in developing digital services for individuals, businesses, and government institutions.

STC demonstrated stable financial performance during 2024 and 2025, reflecting its ability to face competition in the telecommunications market. The company's operating revenues reached approximately 49-51 billion Saudi Riyals in 2024, with a net profit of around 8.0-8.5 billion Riyals for the same period. This moderate growth in revenues and profits is attributed to the continuous expansion of data services and investments in fifth-generation technologies and fiber optics. The company maintained an operating profit margin ranging between 18-20%, and a net profit margin of about 16-17%, despite increased capital expenditures. This financial stability reflects the effectiveness of the company's strategies in cost management and achieving sustainable returns for shareholders, while continuing to expand digital services and solutions.

STC's stock (7010) is among the most traded and followed stocks in the Saudi financial market. By the end of 2024, the stock price ranged between 80 and 90 Saudi Riyals, closing at around 87 Riyals. In early 2025, the positive performance continued, with the stock reaching around 92 Riyals at certain times. With approximately 1.2 billion shares outstanding, the company's market capitalization exceeded 105 billion Saudi Riyals, making it one of the top three listed companies in the market. The price-to-earnings (P/E) ratio ranged between 18 and 20, reflecting market confidence in the company's sustainable growth and profitability. There is significant interest from institutional and foreign investors in STC's stock, especially with stable dividend distributions and a strong financial performance record.

STC maintains a regular cash dividend distribution policy, distributing between 30% to 35% of net profits annually. In 2024, the company distributed approximately 4.37 billion Riyals to shareholders, at a rate of 3.65 Riyals per share, representing a cash yield ranging between 3% and 4.2% depending on the stock price at the time of announcement. Distributions are typically made in two installments: semi-annually and at the end of the fiscal year. This approach enhances the stock's attractiveness to investors seeking continuous income and demonstrates management's commitment to balancing growth investment with shareholder interests.

STC holds the top position in the Saudi telecommunications market in terms of subscriber numbers and market share. By the end of 2024, the number of mobile service subscribers reached approximately 20 million, representing a market share of between 55% and 60%. In fixed internet services (fiber optics), the number of subscribers exceeded 1.5 million, with coverage expanding in major cities. The STC Pay service also experienced rapid growth, surpassing one million active users. This growth in the customer base reflects the success of the company's strategies in expansion and service quality improvement, confirming its position as a major provider of digital telecommunications in the Kingdom.

STC systematically invests in developing infrastructure by expanding 5G networks and fiber optics, focusing on major cities and densely populated areas. The company has launched several initiatives to cover over 80% of the Kingdom with fiber optic networks by 2030. It has also entered into international partnerships to enhance artificial intelligence and Internet of Things (IoT) services, and to develop large local data centers to support digital transformation. These investments not only enhance the company's competitiveness but also contribute to improving the quality of services provided to individuals and institutions.

The telecommunications sector in Saudi Arabia operates within a competitive environment that includes companies like Mobily and Zain Saudi Arabia. Despite strong competition, STC has maintained its leadership due to its diverse services and significant investments in technology and infrastructure. The company offers integrated solutions that include mobile and fixed telephony, internet, cloud computing, and digital financial services. It boasts higher profit margins compared to competitors, and the support from the Public Investment Fund provides it with substantial investment capacity. This distinction is reflected in customer base growth and stable returns, despite regulatory challenges and pricing pressures.

STC adopts an ambitious digital transformation strategy that includes investing in cloud services, artificial intelligence, and the Internet of Things. The company has launched advanced digital solutions for businesses and institutions, and expanded its range of digital financial services through STC Pay. It has also formed partnerships to develop cybersecurity services and advanced data centers, contributing to enhancing its position as a leading provider of integrated digital solutions in the Kingdom. This innovative approach is a key factor in supporting the company's sustainable growth and enhancing its ability to cope with rapid changes in the telecommunications market.

STC is managed by a board of directors that includes representatives from major shareholders and independent experts in the technology and investment sectors. In 2024-2025, Saeed Al-Shaddadi served as CEO, leading a specialized executive team in networks, digital services, and corporate development. The management relies on effective governance and continuous coordination with governmental and regulatory bodies. The company focuses on developing technical talent, which is reflected in its ranking among the best work environments in the Kingdom. The management also provides periodic reports to the board of directors to ensure the implementation of strategies and the achievement of financial and operational goals.

STC witnessed several developments during 2024 and 2025, most notably achieving positive financial results in the first quarter of 2024 with a net profit of 2.15 billion Riyals. The company expanded its infrastructure projects and launched initiatives to cover more cities with fiber optic networks. It also announced investments in Gulf telecommunications companies and signed partnerships with global firms in artificial intelligence and cybersecurity. On the regulatory front, it obtained new licenses to support 5G and IoT expansions. Changes in executive management were also observed to enhance innovation, while continuing to expand digital services and community initiatives.

Despite STC's strength, the company faces a range of challenges and risks. Among the most prominent are intense competition from Mobily and Zain, and price pressures resulting from regulatory policies. Continuous investment in modern technologies and infrastructure expansion requires significant financial resources, which may affect profit margins. General economic fluctuations in the Kingdom or the region may also impact customer spending. Regulatory changes may impose additional requirements on the company. Therefore, management focuses on flexibility in growth strategies, financial oversight, and investing in technical competencies to effectively address these challenges.

STC plays a pivotal role in achieving the targets of Saudi Vision 2030 by supporting digital transformation and developing telecommunications infrastructure. The company contributes to implementing major national projects to expand high-speed internet access in cities and remote areas, providing advanced business solutions for both the public and private sectors. It also participates in e-learning and remote work initiatives, enhancing the digital economy. This strategic role is a key factor in sustaining growth and enhancing STC's position as a fundamental contributor to the national economy and technological transformation.

STC is heading towards enhancing its investments in artificial intelligence, cloud computing, and the Internet of Things, focusing on developing data centers and expanding its fiber optic network. The company plans to expand its regional and international presence through acquisitions and partnerships, while continuing to innovate in digital and financial services. At the local level, the company continues to support digital transformation initiatives in government and private sectors. STC is expected to continue achieving sustainable growth, maintaining a stable dividend distribution policy and balanced financial management, while being prepared to face future challenges in the rapidly evolving telecommunications sector.