RIYADH, 25 April — Saudi telecom giant STC is preparing a partial float of shares on the Saudi stock exchange very soon after announcing its first financial results in four years, its chairman said yesterday.
“We are preparing for the flotation of a small part of the shares very soon,” Saudi Telecom Co. Chairman Khaled Al-Melhem said. “We are awaiting the green light from the authorities.”
Yesterday, STC declared 2000 net profit of $1.054 billion. Operating earnings reached $4.5 billion and total assets were $9.4 billion, up 13 percent on 1999.
STC also announced profit of $1.099 billion for the period from May 1998 to December 1999.
Net profit in 1999 alone was $644.8 million.
STC began operating on a commercial basis in May 1998, when it was turned from a government department into a company as a first step toward privatization. The financial results announced yesterday were the first to be released since then.
The company, which has a monopoly over telephone, mobile and Internet services in the Kingdom, is expected to announce its 2001 results in the next few days.
This has been one of the most essential requirements for the listing of STC on the Saudi stock market and the flotation of some of its shares, which independent analysts estimate will be 25 percent.
STC has a capital of SR12 billion ($3.2 billion) divided over 240 million shares each having a nominal value of SR50 ($13.30).
Asked if the prevailing positive situation on the Saudi stock market might encourage STC to speed up the flotation, Melhem said the decision “should come from the owners.”
The Saudi Tadawul All-Shares Index closed on Tuesday at 2,694.74 points, a new record high, up two percent from Thursday’s closing and some 11 percent higher than the end-2001 closing.
The Saudi government last year approved a bill passed in the Shoura Council to end the state’s monopoly of the telecom sector and bring in foreign investors.
The bill allows for the establishment of new shareholding companies while not ruling out foreign investors.
Melhem told a conference in Riyadh yesterday that there are 3.3 million telephone lines and three million mobile lines in Saudi Arabia, adding there is a potential for much more in a country with a population of 22 million.
Last year, STC picked Ericsson of Sweden and Finland’s Nokia for a project to expand the GSM network to 5.5 million lines.
The government has also set up the Saudi Telecommunications Commission, a regulatory body to supervise the liberalization and opening up of the market to more companies.
In the past few years, STC has dramatically slashed the prices of its services, especially for mobile phones.
Charges for obtaining a GSM line have been reduced from $950 three years ago to just $80 now. STC is introducing the pre-paid mobile service on Saturday.
Melhem said STC was considering further reductions in the near future and planning to upgrade services.
By the end of the year, it will launch the third generation of cellular phones.
The Supreme Economic Council, the Kingdom’s highest policymaking body on economics, is expected to lift a ban on foreign investments in the telecommunications sector by modifying the so-called negative list of sectors barred to foreign investors.
