Saudi Telecom Company’s (STC) baseline credit assessment has been upgraded from a2 to a1 by Moody’s Investor Service, a bond credit rating company, citing that the STC has maintained its strong financial performance despite challenges.
The rating agency also reaffirmed the long-term issuer rating of the state-controlled company, which is the biggest telecom provider in Saudi Arabia.
STC has generated a robust financial sheet over the years, according to the rating agency, and is “well-positioned” to leverage growth opportunities in the kingdom’s telecom and information and communications technology (ICT) market.
As part of its efforts to diversify the economy and boost the non-oil sector, the government is concentrating on the telecom and technology sectors. STC has been investing in expanding its other business lines, in addition to its main telecom operations, as part of its diversification strategy.
“The upgrade reflects STC’s conservative financial profile and the ability of the company to maintain strong metrics despite some challenging times, including the oil price crash in 2015-2016 and more recently, the coronavirus pandemic. As the leading operator in Saudi Arabia, with more than 70 percent share of total revenue in 2020, STC is well-positioned to take advantage of the growth opportunities in the Saudi telecom and ICT market,” said Moody’s.
STC is the Middle East and North Africa’s (MENA) largest telecommunications services company. It is the largest operator in the Kingdom of Saudi Arabia, with a global presence in nine countries. As of June 2021, the company owned $2.2 billion in unrestricted cash and cash equivalents. It also owns $773 million of short-term Murabaha and $1.03 billion of investments in a Sukuk issued by Saudi government, which the company can liquidate.