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7010

Governance: A

STC

Saudi Telecom Co.

44.04 SAR / Share

As of: May 28, 2026

14.5x P/E Ratio Trailing 12 Months

2.6x P/B Ratio Price to Book Value

9.5% Dividend Yield Annual Dividend / Share

219.75B SAR Market Cap Total Valuation

0.74 Beta Systematic Risk Index

19.3% Net Margin Net Profit / Revenue

The Story

STC stands as Saudi Arabia's premier telecommunications and digital services provider, combining robust cash generation and high returns on capital with a strategic mandate to drive the Kingdom's digital transformation.

Source: Q1 2026 (2026-05-04)

Value Creation +11.8% Excess Return on Capital (Spread between ROIC/ROE and Cost of Capital)

Cash Flow Payback — Estimated years of operating cash flows required to cover Enterprise Value

Performance & Distributions

Dividend Yield Trailing annual dividends paid relative to share price

9.5%

Sustainable Growth Rate Rate at which company can grow internally using reinvested profits

-7.2%

Payout Ratio Percent of net profits distributed as dividends

138.0%

Net Margin Net profit margin generated from total operational revenue

19.3%

ROIC Return on Invested Capital

19.0%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

14.5x

P/B Ratio Market capitalization compared to corporate book value

2.6x

EV / EBITDA Operating multiple reflecting core operational leverage

9.1x

EV / SALES Asset pricing multiple relative to total topline revenue

2.9x

Growth Story

STC's revenue has demonstrated steady expansion, rising from SAR 71.78 billion in FY 2023 to SAR 75.89 billion in FY 2024, and reaching SAR 77.82 billion in FY 2025, with TTM revenue climbing further to SAR 78.55 billion. This top-line growth is supported by its core telecom operations and rapid expansion in digital subsidiaries like Solutions, Center3, and STC Bank. However, the company's long-term growth capacity is characterized by a negative five-year average reinvestment rate of -37.99%, reflecting substantial capital returns to shareholders that exceed its net capital expenditures and working capital investments. Consequently, its sustainable growth rate stands at -7.21%. This indicates that while STC continues to capture incremental market growth through targeted capital expenditures—such as its TTM capex of SAR 8.24 billion—its primary financial strategy is oriented toward distributing cash back to its owners rather than aggressively compounding its capital base through heavy reinvestment.

Profitability Dynamics

STC operates as a highly efficient value creator, boasting a five-year average Return on Invested Capital (ROIC) of 18.98%, which comfortably outpaces its Weighted Average Cost of Capital (WACC) of 7.14%. This substantial positive gap of 11.84% highlights the company's strong competitive advantages and exceptional capital efficiency. Profitability remains robust, with a TTM operating margin of 18.88% (EBIT of SAR 14.83 billion) and a net profit margin of 19.33% (net income of SAR 15.19 billion). This high profitability translates into massive cash flow generation, enabling the company to support its established dividend policy of distributing a minimum of SAR 0.55 per share quarterly. The company's ability to generate strong returns on its asset base, which stood at SAR 157.48 billion at the end of FY 2025, underscores its role as a cash-generative powerhouse that consistently creates economic value for its shareholders.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

0.74

Cost of Equity Minimum required rate of return demanded by shareholders

7.5%

WACC Weighted average cost of total debt and equity funding

7.1%

Debt-to-Equity Ratio Proportion of corporate funding financed by debt creditors

12.3%

Risk Factors

STC's risk profile is exceptionally stable, characterized by a low relevered beta of 0.74, reflecting its defensive utility-like characteristics and dominant market position. The company maintains a solid balance sheet with latest cash reserves of SAR 19.55 billion against total debt of SAR 27.07 billion. To fund its strategic initiatives, STC completed a major international sukuk issuance of SAR 7.50 billion in early 2026, demonstrating its strong access to global debt markets at competitive rates, supported by an after-tax cost of debt of 4.30%. Business-specific risks include its significant exposure to government receivables, which totaled SAR 22.36 billion as of March 31, 2026, with a portion extending beyond two years. Additionally, the company manages geopolitical risks and ongoing regulatory disputes, such as the tariff reimbursement litigation involving its Kuwaiti subsidiary, though management does not expect these to have a material impact on its overall financial position.

Governance Disclosures

Rating: A

We track 15 key governance and oversight matters for this company in our database.

Significance: 4/10 Tunneling

Remuneration and Loans to Board Members and Senior Executives

The company extended loans to senior executives totaling SAR 12.273 million as of 31 March 2026. Additionally, total benefits, remuneration, and compensation paid to board members and senior executives for the three months ended 31 March 2026 amounted to SAR 465.769 million.

Significance: 6/10 Tunneling

Compensation and Loans to Senior Executives

Total remuneration and compensation for board members and senior executives for the nine months ended 30 September 2025 amounted to SAR 867 million. Additionally, loans outstanding to senior executives totaled SAR 9.666 million.

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In-Depth Analysis