RIYADH – Saudi Telecom Company (STC) is expected to report about 9 percent increase in revenues at the end of the current year, according to a special report issued by Morgan Stanley Bank. The report is based on STC's strength as a leading telecommunication services provider and its ability to provide integrated services, supplying significant added values to the Saudi market in the long term. Considering the projected increase in STC revenues, Morgan Stanley reports that "the Saudi telecommunications market performance" has improved. The report points to the possibility of free cash flow (FCF) for telecommunications in the Kingdom during 2012-2013, which would impact positively on the dividend yields to STC stock owners. A number of reports about STC's performance have already been issued during the current financial year. In one special report, JP Morgan has confirmed that STC's operational revenues will continue to grow during the next three years. The study expects the group's yearly revenues to grow five to twelve percent in the coming three years (EBITDA/net income CAGR). The report is based on the group's ability to provide data services to the local market and the growth of STC Group's representative core operation processes in the international markets and STC's strategy to expand outside the Kingdom. The report unveiled STC's ability to achieve healthy revenues of (EBITDA/Net Income CAGR) during 2012 and 2013 at 5 percent and 6.2 percent respectively, supported by good FCF yields of 8.4 percent and 11.1 percent respectively for the same period. It also expects steady performance from STC with expected EBITDA margin of 35.8 percent in 2014. Aljazeera Capital, the investment banking arm of Aljazeera Bank has recently estimated the purchase price of STC stock at SR55.7 during the coming 12 months which translates to a 31.4 percent rise in its current price as a result of its healthy leadership and growth in the fixed broadband services. In addition, the expansion policy adopted in international developing markets is helping STC create opportunities to capture value-added growth in the long term. – SG
