stc board proposes 150% capital increase via bonus shares, dividend policy amendment

Logo of stc

The board of directors of stc recommended increasing the company’s capital by 150% through bonus shares offering, capitalizing SAR 30 billion of retained earnings, the telecom services provider said in a statement to Tadawul today, June 12.

Each shareholder will be granted 1.5 bonus share for every share owned on the eligibility date. 

The capital increase and the bonus share distribution are subject to the approval of the competent authorities as well as the company's extraordinary general meeting (EGM).

In the case of fractional bonus shares, these shares will be collected into one investment portfolio and will be sold at market price within 30 days on a pro rata basis from the date of determining the allocation of new shares for each shareholder, the company noted.

Amendment to dividend policy

stc board also recommended amending the company’s dividends policy – which was approved by the shareholders on Nov. 30, 2021 – to reflect the new proposed increase in the telco’s capital.

The proposed amended policy is based on committing a minimum dividend of SAR 0.40 per share per quarter, effective from Q4 2021, for three years.

stc will consider paying additional dividends, subject to the board’s recommendation, after evaluating the company’s financial position, future expectation and capital requirement. Additional dividends may vary from quarter to quarter, based on the company’s performance.

The dividends policy will remain subject to change based on any material changes in the strategy and business of the company, including the business environment; applicable laws and regulations; and any banking, funding or credit rating covenants that the company may be bound to follow from time to time.

The total minimum committed cash dividends will not change based on the suggested amendment in dividends policy, and it will remain at SAR 8 billion per year, the statement noted.

Proposed capital increase is largest in history of Saudi market: Chairman

“The capital increase represents an important milestone for stc being one of the biggest listed companies in the Saudi market, as this capital increase is the largest in the history of the Saudi market,” Chairman Prince Mohammed bin Khaled Al Abdullah Al Faisal said in a separate statement.

This increase will lead to enhancing the liquidity in the company’s shares and make them more accessible to wider group of investors.

The aim of the capital increase is to support the company in achieving its strategy of expansion and growth, and maximizing the total return for shareholders, by increasing and diversifying investments and seizing the expected growth opportunities in the telecommunications and information technology sectors in the Kingdom and the region.

The capital increase is in line with the company’s vision to become the leading company in the field of communications and information technology and to lead the digital transformation locally and regionally by providing innovative digital services, products and solutions.

Furthermore, the increase is also consistent with the Kingdom’s Vision 2030 to spur the private sector’s contribution in the gross domestic product (GDP) through the diversification of the Saudi economy.

stc is moving with tangible and clear steps towards achieving its strategy and vision of becoming the leading company in the field of digital and communications domain to enable the society and the economy to prosper in Saudi Arabia and beyond, the statement said.

The company's "dare" strategy is based on four main pillars: expanding in scale and scope, enriching the customer experience, enabling digital transformation, and accelerating its assets monetization.

Since the launch of its strategy, stc Group has worked on many initiatives and projects that had a robust impact on increasing and diversifying the group's revenues through expansion of its core business in the Kingdom and the region, in addition to the investment made in new promising industries.

These initiatives and projects have contributed positively towards sustainable and profitable growth of the company.

The capital increase supports the implementation of stc's ambitious growth strategy through a series of innovative initiatives and projects.

The company expects that the capital increase will support the implementation of the group’s strategy and vision, while ensuring that it continues to deliver distinguished operational and financial performance.

It also expects that the large and diversified investments made by the group will have a positive and tangible impact on the operational and financial results in the medium to long term as some of the new subsidiaries, which are at a nascent stage, will start to positively reflect in the group’s performance as they reach operational and business maturity.

Below link includes proposed amendments to the dividend policy: