stc Q1 2024 Net Profit Surges 44.5%, Revenues Hit SAR19.1 Billion

stc, Saudi Arabia’s largest telecommunications operator, has reported a robust financial performance for the first quarter of 2024, with net profit surging 44.5% quarter-on-quarter and revenues reaching SAR19.1 billion, according to an official press release. The company attributed the growth to strong performance in its commercial and wholesale segments, as well as contributions from its subsidiaries.

Context and Background

The results come amid a period of significant transformation for stc, which is executing a strategic growth plan aligned with Saudi Arabia’s Vision 2030. The company has been expanding its digital services, investing in infrastructure, and pursuing strategic partnerships to enhance its competitive position both domestically and regionally. The first quarter of 2024 also saw the conclusion of major agreements, including a landmark tower infrastructure deal with the Public Investment Fund (PIF).

Key Financial Highlights

Revenues for Q1 2024 increased by 7.76% compared to the previous quarter and 5.07% year-on-year, reaching SAR19,100 million. The growth was driven by a 1.2% increase in stc KSA’s revenues, itself boosted by a 6.7% rise in commercial unit revenues and a 5.7% increase in carriers and wholesale unit revenues, which offset a decline in the business unit. Subsidiary revenues also rose by 13.0%. Gross profit for the quarter grew by 5.13% quarter-on-quarter and 1.65% year-on-year to SAR9,386 million. EBITDA increased by 16.30% quarter-on-quarter and 2.07% year-on-year to SAR6,474 million. Net profit attributable to shareholders rose by 44.50% quarter-on-quarter and 5.69% year-on-year to SAR3,286 million, leading to a dividend distribution of SAR0.40 per share.

Strategic Developments and Partnerships

During the quarter, stc Group and the Public Investment Fund signed final agreements for the sale of a 51% stake in the Telecommunications Towers Company (TAWAL), valuing TAWAL at SAR21.94 billion. The agreement includes a merger of TAWAL with Golden Lattice Investment Company to create a new national champion in the telecommunications tower sector, with stc Group retaining a 43.06% share. This move aligns with stc’s strategy of focusing on high-value assets that offer opportunities for expansion and growth. Additionally, stc Bank received Saudi Central Bank (SAMA) approval for a beta launch, marking a significant milestone in the Group’s entry into the digital banking space. The bank aims to offer Sharia-compliant banking services using advanced fintech solutions. The network also demonstrated its technological leadership during Ramadan, handling record voice and data traffic at the Holy Mosque of Makkah, with a 35% increase in voice calls and a 37% increase in data volume. stc concluded several strategic agreements at LEAP 2024 with Huawei, Ericsson, and Samsung to enhance innovation and digital transformation. Its subsidiary, solutions, signed an MoU with the French Devoteam Group to explore regional and global IT investment opportunities, following the completion of solutions’ acquisition of a 40% stake in Devoteam Middle East.

Implications and Impact

The strong financial results and strategic initiatives underscore stc’s role as a key driver of Saudi Arabia’s digital economy. The TAWAL deal, in particular, is expected to unlock value by attracting investment into tower infrastructure and supporting the expansion of 5G networks and future technologies. The beta launch of stc Bank signals the beginning of a new era in Saudi banking, with increased competition and innovation in financial services. The partnerships with global technology leaders are likely to accelerate the Country’s digital transformation and position stc as a regional technology hub. These developments also reinforce investor confidence in Saudi Arabia’s telecom sector, contributing to the Kingdom’s economic diversification efforts beyond oil.

Vision 2030 Alignment

stc’s Q1 2024 performance and strategic moves align closely with Saudi Arabia’s Vision 2030 goals of building a diversified, digital-first economy. By expanding digital infrastructure, promoting innovation through international partnerships, and entering the fintech space, stc is helping to create a vibrant digital ecosystem that fosters entrepreneurship and attracts investment. The company’s commitment to enhancing the experience of pilgrims at the Two Holy Mosques also reflects its support for the Kingdom’s religious and cultural priorities. As stc continues to execute its growth strategy, it will play a pivotal role in realizing the Vision 2030 objectives of a thriving and sustainable economy powered by technology and innovation.

20 Questions

Q1. What is the net profit of stc for Q1 2024?

A1. The net profit for stc in Q1 2024 reached SAR3,286 million, an increase of 44.50% compared to the previous quarter and 5.69% year-on-year.

Q2. How much revenue did stc generate in Q1 2024?

A2. stc generated revenues of SAR19,100 million in Q1 2024, representing a 7.76% increase from the previous quarter and a 5.07% rise from Q1 2023.

Q3. What was the gross profit for the quarter?

A3. The gross profit for Q1 2024 was SAR9,386 million, up by 5.13% from the previous quarter and 1.65% from the year-ago period.

Q4. What was the EBITDA figure for stc in Q1 2024?

A4. EBITDA for Q1 2024 stood at SAR6,474 million, reflecting a quarter-on-quarter increase of 16.30% and a year-on-year growth of 2.07%.

Q5. What dividend was announced for Q1 2024?

A5. stc announced a dividend of SAR0.40 per share for Q1 2024, in line with the approved dividend distribution policy.

Q6. Who is the CEO of stc Group?

A6. The CEO of stc Group is Olayan Mohammed Alwetaid, who has been leading the company’s strategic growth initiatives.

Q7. What stake in TAWAL is PIF acquiring?

A7. The Public Investment Fund is acquiring a 51% stake in Telecommunications Towers Company (TAWAL), valuing the company at SAR21.94 billion.

Q8. What will be stc’s ownership percentage in the merged tower entity?

A8. After the merger with Golden Lattice Investment Company, stc Group will own 43.06% of the new merged entity.

Q9. Why is stc partnering with PIF on towers?

A9. The partnership aligns with stc’s strategy of maintaining shares in value-added assets like tower infrastructure, which have strong growth potential.

Q10. What is the significance of the stc Bank beta launch?

A10. The beta launch of stc Bank is a transitional phase before the full launch, aiming to provide Sharia-compliant banking services via fintech, supporting Vision 2030.

Q11. What approvals did stc Bank receive?

A11. stc Bank received the approval of the Saudi Central Bank (SAMA) for its beta launch.

Q12. How did stc’s network perform during Ramadan?

A12. stc’s network recorded a 35% increase in voice calls and a 37% increase in data volume at the Holy Mosque of Makkah, setting new records.

Q13. What technological milestone was achieved during Ramadan?

A13. For the first time, third-generation technologies were dispensed, and modern digital voice technologies handled over 55% of voice traffic at the Holy Mosque.

Q14. What agreements did stc sign at LEAP 2024?

A14. stc signed strategic partnerships with Huawei, Ericsson, and Samsung to enhance innovation and accelerate digital transformation.

Q15. What is the approximate total value of TAWAL?

A15. TAWAL was valued at a total of SAR21.94 billion in the deal with PIF.

Q16. How did stc’s subsidiaries perform in Q1 2024?

A16. Revenues from stc’s subsidiaries increased by 13.0% during the first quarter of 2024.

Q17. What is the purpose of solutions’ MoU with Devoteam?

A17. The MoU aims to cooperate in researching and exploring regional and global investment opportunities in the field of information technology.

Q18. What stake does solutions hold in Devoteam Middle East?

A18. solutions acquired a 40% stake in Devoteam Middle East, which led to the MoU with Devoteam Group.

Q19. How is stc contributing to digital transformation in Saudi Arabia?

A19. stc is investing in digital infrastructure, forging international partnerships, and innovating in fintech to support the Kingdom’s digital economy.

Q20. What is the relevance of these results to Vision 2030?

A20. stc’s performance and initiatives align with Vision 2030’s goals of economic diversification, digital transformation, and enhancing quality of life.

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