Saudi Telecom Company STC: Financial Performance and Competition

Saudi Telecom Company STC is the leading company in the telecommunications sector in the Kingdom of Saudi Arabia. It was established in 1998 as part of a government plan to privatize the telecommunications sector and was listed on the Saudi financial market (Tadawul) in 2003 under the symbol (7010). STC holds the largest share of the local market in fixed-line, mobile, internet, data services, and IT solutions. STC is characterized by strong government support, with the Public Investment Fund (PIF) holding a major stake in the company, enhancing its financial stability and pivotal role in the Vision 2030 projects.

STC has expanded regionally and globally through strategic investments, most notably its entry as a major investor in the Spanish company Telefónica. The company also participates in massive infrastructure projects locally and plays a key role in national digital transformation and smart city development. This position has made STC a fundamental element in the indicators of the Saudi stock market and the telecommunications sector in the region.

The ownership of Saudi Telecom Company STC reflects its close relationship with the state. The Saudi Public Investment Fund (PIF) holds a strategic stake in the company after acquiring shares from the Communications and Information Technology Commission (CITC). The remaining shares are distributed among the government, pension funds, and local and international individual and institutional investors.

The company is overseen by the Saudi Capital Market Authority (CMA) and adheres to financial disclosure and transparency standards. Additionally, the CITC monitors service quality and regulatory compliance. This framework ensures a balance between the government's digital transformation objectives and the company's sustainability as a competitive business entity.

Regulatory governance requires STC to regularly disclose its financial results, comply with anti-trust policies, and implement sound governance standards, which enhances investor confidence and maintains market stability.

Saudi Telecom Company STC achieved strong financial performance in 2024 and 2025, reflecting its market position. The price of STC shares on Tadawul ranged between 11 and 12 Saudi Riyals by the end of 2025, while its market capitalization exceeded 57 billion Saudi Riyals, placing it among the top five listed companies in the Saudi market.

The company's price-to-earnings (P/E) ratio was approximately 13–15 times, a typical level in the telecommunications sector characterized by stable profit margins and regular dividends. The dividend yield exceeded 3-4%, with a distribution of 2.2 Riyals per share in 2024, raising total dividends by 37.5% to reach 11 billion Riyals annually.

In terms of revenue, STC achieved an annual growth rate of 4-5%, with revenues rising from 54 billion Riyals in 2022 to 59 billion Riyals in 2024. The annual net profit reached 24.69 billion Riyals in 2024, supported by an increase in subscriptions to data services and international expansion. These indicators confirm the company's ability to achieve sustainable growth despite competition and technological transformations.

The telecommunications and information technology sector in Saudi Arabia is one of the largest and most dynamic economic sectors. In 2024, the market size was approximately 18.3 billion dollars, with expectations to rise to 22.2 billion dollars by 2029 at a compound annual growth rate of 4.3%. The sector includes fixed and mobile phone services, internet, data transmission, cloud computing, and smart city services.

The CITC oversees the regulation of the sector and works to ensure fair competition and expand the geographical coverage of 4G and 5G networks. 4G coverage reached 100% of populated areas, while 5G coverage exceeded half in 2024, with plans to achieve full coverage in the coming years.

The telecommunications sector contributes to the GDP and is a key driver of Vision 2030's digital transformation. Total spending on telecommunications and information technology services exceeded 166 billion Riyals in 2023, attracting investments and enhancing competitiveness in digital infrastructure.

Despite STC's dominance in the Saudi telecommunications sector, there is strong competition from major local companies. The two main competitors are:

1. Etihad Etisalat (Mobily): The second-largest telecommunications company in Saudi Arabia, providing mobile and internet services, and holding a significant market share, especially in the business sector. Its symbol on Tadawul is (7020).

2. Saudi Mobile Telecommunications Company (Zain Saudi Arabia): Focuses on data and internet services and benefits from strategic alliances with Mobily to provide joint solutions and expand coverage.

In addition to these, there are companies specializing in fiber optics and digital solutions, but they do not pose a direct threat to STC's market share. Competition is primarily focused on service quality, package pricing, and providing innovative solutions for both the public and private sectors.

Saudi Telecom Company STC witnessed several significant developments during 2024 and 2025, which had a substantial impact on the company's strategies and market position:

- Winning a massive government contract worth 32.64 billion Riyals in January 2025 to build and operate the national digital infrastructure.
- Increasing STC's stake in the Spanish company Telefónica to 9.97%, qualifying it for a seat on the board and enhancing its revenues from international dividends.
- Raising cash dividends by 37.5% in August 2024, increasing total annual dividends to 11 billion Riyals.
- Continuing to expand 5G network coverage and initiatives to deploy fiber optics in collaboration with the government.
- Focusing on cloud computing solutions, cybersecurity, and the Internet of Things, reflecting the shift towards a digital economy and enhancing new revenue sources.

These developments support STC's market position and demonstrate its commitment to digital transformation and meeting the needs of customers and investors.

The shares of Saudi Telecom Company STC are traded under the symbol (7010) in the Saudi financial market (Tadawul). During 2025, the share price ranged between 11 and 12 Saudi Riyals, influenced by the company's positive results and sector developments.

STC is classified among the top five companies by market capitalization in the Saudi market index (TASI), and its stock carries significant weight in the index, making any change in its price impactful on overall market performance. The stock benefits from the company's financial stability, regular dividends, and government support through the Public Investment Fund.

Investors pay considerable attention to STC's stock performance, especially with ongoing improvements in profits and dividends. Despite competition, the stock remains a preferred choice among telecommunications sector stocks in the region.

STC's future strategy focuses on several key areas:

- Developing digital infrastructure and expanding 5G network coverage while starting research on 6G.
- Investing in cloud computing services, cybersecurity, and the Internet of Things, with a focus on providing integrated solutions for the business and government sectors.
- Supporting smart city and digital energy projects in collaboration with government entities under Vision 2030.
- Enhancing international expansion through strategic investments, such as acquiring stakes in global companies and benefiting from foreign dividends.
- Growing the portfolio of digital products, such as electronic payment services and emerging technologies.

This strategy aims to diversify income sources, enhance the company's competitiveness, and achieve sustainable growth in revenues and profits in the long term.

Saudi Telecom Company STC is characterized by a regular and attractive dividend distribution policy for shareholders. In 2024, cash dividends amounted to 2.2 Riyals per share, equivalent to an annual yield of around 3-4% based on the stock price. In August 2024, the company approved a 37.5% increase in dividends, bringing the total to 11 billion Riyals annually.

STC is keen to distribute a significant portion of its profits, benefiting from strong cash flows and rising net profit. This policy is a major attraction for investors seeking income stability, especially amid limited competition in the sector.

The company follows a clear policy for announcing dividends, adhering to payment dates and transparency in disclosures. This policy allows shareholders to predict their annual returns based on the company's actual results and future growth.

Saudi Telecom Company STC has shown gradual growth in revenues and net profits in recent years. Between 2022 and 2024, revenues increased from 54 billion Riyals to 59 billion Riyals (an overall growth of nearly 9%). Meanwhile, net profit surged from 23.5 billion Riyals to 24.69 billion Riyals in 2024 (an approximate growth of 5%).

This growth is attributed to the increasing reliance on data and internet services, the expansion of digital solutions for individuals and businesses, and the regional and international presence. Strategic alliances and foreign investments have also contributed to additional returns for the company.

Management expects this moderate growth to continue in 2025 and beyond, supported by digital transformation projects and investments in modern technologies.

Saudi Telecom Company STC plays a pivotal role in achieving the goals of Vision 2030, especially in the digital transformation axis and enhancing smart infrastructure. The company has been tasked with implementing major national projects, including building fiber optic networks, expanding 5G coverage, and supporting smart cities.

STC collaborates with government entities to develop advanced digital solutions for both the public and private sectors and to provide telecommunications services in remote areas. It also invests in artificial intelligence, cloud computing, and the Internet of Things initiatives, aligning with Saudi Arabia's plans to transition to an advanced knowledge-based economy.

This role enhances STC's position as a strategic partner for the government in digital infrastructure projects and provides the company with sustainable growth opportunities in the long term.

Despite the strength of Saudi Telecom Company STC, it faces several potential challenges:

- Increasing competition from local and global telecommunications companies, especially with the evolution of services and pricing innovations.
- Rapid technological transformations, such as the shift of users to digital communication applications and next-generation technologies (5G and 6G).
- Regulatory pressures related to pricing, service quality, and consumer rights.
- Risks of international expansion, such as currency fluctuations and difficulties in adapting to new business environments.
- Challenges related to cybersecurity and customer data protection.

STC addresses these challenges through continuous investment in innovation, enhancing governance, and developing human and technical resources. It also relies on a risk distribution policy and diversifying income sources through expansion into new markets and digital services.

The Saudi telecommunications sector is expected to continue growing until 2029 at an annual rate exceeding 4%. With the increasing reliance on data, cloud computing, and the Internet of Things, major companies – led by STC – will have significant opportunities to expand their businesses.

STC aims to strengthen its leadership through massive investments in smart infrastructure, digital city projects, and the development of sixth-generation services and satellite networks. The company also focuses on supporting local innovation through partnerships with universities and business accelerators.

STC's role will remain pivotal in national digital transformation, providing advanced solutions for individuals and businesses while continuously adapting to technological developments and market demands.