Saudi Telecom Co, the biggest phone operator in Saudi Arabia, will see revenue grow as the country diversifies its economy away from a reliance on crude oil by developing high-tech industries, Chief Executive Officer Khaled Bin Hussain Biyari said.
Cheaper oil is forcing economic reforms in Saudi Arabia, and the Riyadh-based company is planning to increase investments in cloud-based services and cybersecurity systems to capitalize, Biyari said.
“It will be a very interesting and very different ecosystem from the one that we have right now and we are investing in that direction,” Biyari said in an interview on Tuesday. “We’re not waiting. If the telcos are to enable such a transformation, then they need to invest in those directions.”
In its first months of power, King Salman’s administration has brought swift change to the traditionally slow-moving kingdom, overhauling the cabinet, merging ministries and realigning the royal succession. According to reports from local media, the government will soon unveil a “national transformation program.”
In the coming months, STC will be on the hunt for deals in the information and communications technology industries, “rather than the telco space,” Biyari said. And the company also may issue sukuk or other debt instruments to fund investments.
“We will be opportunistic, so if there is an opportunity that makes sense to us, especially in the region, then we may study it carefully and consider it,” he said.
STC is seeking to buy the 74 percent of Viva Kuwait Telecom Co. it doesn’t already own in a deal that could be worth more than $1 billion. The company is expecting a response this Sunday on how many shares its offer has collected, according to Biyari. “The offer STC has put on the table is quite reasonable and actually does have a premium compared to what a fair price for the share was declared by the independent consultant,” he said.
Last week, Saudi Telecom reported a 20 percent drop in fourth-quarter profit to 1.95 billion riyals from 2.44 billion riyals a year earlier. Six analysts had projected 2.46 billion riyals, the average of estimates compiled by Bloomberg.
The decline in 2015 profit was because of “one-offs” including an early retirement plan for employees, 400 million riyals associated with payments of two months bonus salary to all STC employees at the beginning of the year and “some paper losses due to primary Turkish lira exchange rate,” Biyari said.
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