solutions CEO says all business segments reported growth in 2023

Omer Alnomany, CEO of Arabian Internet and Communications Services Co. (solutions) 

Arabian Internet and Communications Services Co.’s (solutions) business lines witnessed growth during 2023, CEO Omer Alnomany told Argaam in an interview.

He explained that the core ICT services segment increased by 25.6%, IT managed and operational services grew by 40.0%, and digital services rose by 4.7%.

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The company constantly evaluates various growth prospects and actively pursues investments and acquisitions in the communications and information technology market, catering to the business sector in the Kingdom and the region, Alnomany said, adding that this will enables solutions to maintain its leadership and market share.

Below are the interview details.

Q: solutions continued to achieve positive results in 2023, an extension of previous years. What are the most prominent of these results and what are their drivers?

A: solutions continued to enhance its financial performance and achieve the targeted growth rates in revenue and profit during 2023. These positive results come as a result from the team’s efforts to implement the growth strategy that the company has adopted for years, which is in line with the plans of stc Group.

This ambitious strategy pushes us towards expansion in markets and business lines with meaningful returns and working to diversify the service portfolio in order to raise performance rates, increase profitability, and achieve tangible value for shareholders.

Our financial results for 2023 were promising, as solutions revenues reached more than SAR 11 billion, an increase of 25.4% year-on-year (YoY), while net profit came at SAR 1.2 billion, a nearly 13.2% increase YoY.

These positive indicators are a result of the company’s signing of several major contracts last year, which were announced on the Saudi Exchange (Tadawul) website. All of the company's business lines witnessed growth in 2023, as the core ICT services’ share increased by 25.6%, IT managed and operational services grew by 40%, and digital services by 4.7%.

Meanwhile, last year saw an exceptional leap in the revenue from private sector projects, rising 48% YoY to SAR 2.4 billion.

Q: In 2023, solutions announced acquisitions to strengthen its position in the communications and information technology sector. What are the developments with these acquisitions?

A: solutions seeks, through its ambitious strategy, to expand into new markets and business lines and enhance capabilities, thus achieving a competitive advantage in several technical and professional fields. At solutions, we continuously evaluate various growth opportunities to seize all opportunities available through investments and acquisitions in the communications and information technology market for the business sector in the Kingdom and the region. This enables us to maintain our leadership and market share, which is the largest compared to the remaining companies in the market.

In previous years, we announced a number of acquisitions and investments that express this trend. During 2023, solutions fully acquired ccc by stc, after a study of the outsourcing market in the Kingdom, which is witnessing an increasing growth in its services and anticipated to record a compound annual growth rate (CAGR) of up to 13% over the next five years. The company was consolidated into solutions’ financial statement in Q2 2023.

In a step aimed at enhancing capabilities in the field of technical consulting services, solutions recently completed its acquisition of 40% of Devoteam Middle East, which takes over the largest share in the technical consulting services market in the Kingdom and is affiliated with the international group, Devoteam.

This comes in addition to our participation in a global investment round in the US-based Nile Co., a leader in providing secure institutional networking services. The investment is part of a global funding round that raised $175 million from various investors to invest in emerging technologies with the aim of expanding the service portfolio and providing technical solutions, innovative solutions for our customers in the Kingdom and the region, as well as achieving the best value for investors.

solutions announced its first acquisitions during 2022 by acquiring Giza Systems, a company providing systems and application integration services in the Kingdom, the Gulf region, and Africa.

All of these acquisitions had a clear positive impact on the financial results during 2023, as ccc by stc represented approximately 6.8% of total solutions revenues and Giza Systems contributed 14.6% of total revenues.

Q: What strategies has the company undertaken to maintain and enhance its leadership position in the market?

A: Our strategies in solutions are based on four basic principles aimed at strengthening our position in the market for managed services, professional services and business outsourcing. In addition, the company plans to enter into new business lines that integrate with the company’s core activities and diversify customer base and enhances innovation in its services and business models. Moreover, solutions aims to expand the scope of its relationships with partners through global technology suppliers to improve customer experience, and finally working to enhance aspects of integration and transparency in the company's business.

solutions places special emphasis on the concept of innovation and works on raising awareness of it both inside and outside the company through launching a comprehensive innovation program targeting employees and customers. The program aims to innovate numerous products and services that meet evolving customer needs and help them achieve their strategic objectives.

Additionally, solutions continues to work on enhancing operational efficiency by optimal resource utilization and adopting the highest sustainability standards to achieve growth aligned with the economic, social, and digital development goals of Saudi Vision 2030.

Q: What are the most important projects led by solutions to enable digital transformation in both the public and private sectors?

A: solutions contributes to enabling the digital transformation of the government and private sectors in the Kingdom and the region by providing the best and latest telecommunications and information technology services. These services are delivered through a team of experts with a proven track record of accomplishing numerous large-scale projects in record time.

In 2023, the company signed several notable projects, including a contract with the National Center for Government Resources Systems (NCGR) worth SAR 444 million and another contract with Saudi Arabian Oil Co. (Saudi Aramco) valued at approximately SAR 329 million.

Additionally, solutions signed a contract with Remat Al-Riyadh Development Co. to establish, manage, operate, and maintain smart public parking lots in Riyadh for the first phase of the general plan for public parking, spanning 10 years. This represents the first partnership of its kind between solutions and the public sector, aiming to establish a qualitative business model, under the umbrella of stc Group and solutions by stc.

Q: Lastly, what is your dividend distribution policy?

A: Through its strategy and business plans, solutions seeks to achieve tangible value for its shareholders by integrating dividend distribution and reinvestment to support future expansion plans.

solutions’ board of directors recommended distributing SAR 714 million, approximately 60% of net profits, or SAR 6 per share, for 2023. The recommendation will be presented for approval during the upcoming general meeting.

solutions maintained distributing approximately 57% of net profits to shareholders in the previous two years.