HomeCloud/NFVstc gears up €13bn tech investment fund

    stc gears up €13bn tech investment fund


    Technology is key to Riyadh’s economic diversification

    Saudi Telecom Company (STC), the kingdom of Saudi Arabia’s biggest mobile operator, has received shareholder approval to increase its capital to 50 billion Saudi riyals (€13.31bn) to fund local and regional growth, reports The National.

    This represents a 150% increase on its existing float of 20bn riyals (€5.3bn). The financial gearing will be achieved by “capitalising 30bn riyals (€7.65bn) from the company’s retained earnings”, STC said in a regulatory filing to the Tadawul stock exchange, on which its shares are traded, on Wednesday. Shareholders will be granted 1.5 bonus shares for every share owned on the eligibility date as part of the transaction.

    “In case of shares fractions occurrence, STC will collect all fractions in one portfolio to be sold at market price,” the company said. “The value will be distributed to eligible shareholders each by their share within a period not to exceed 30 days.”

    The objective of the creative accounting is to support STC’s growth and expansion strategy and to maximise returns to shareholders, the company said. The move will boost and diversify investments and help STC seize the anticipated growth opportunities in the telecoms and technology sectors in Saudi Arabia and the Middle East, it said.

    STC is playing a central role in Saudi Arabia’s Vision 2030 strategy, by which it aims to steer its economy away from dependence on oil. Technology is a central plank of Riyadh’s economic diversification agenda, with the kingdom projected to spend about $33bn on ICT development in 2022, according to analyst IDC.

    The Saudi sovereign wealth Public Investment Fund (PIF) has a 64% stake in STC. According to The National the PIF raised €3.1bn from the sale of a 6% stake in STC last year. STC also revealed on Wednesday that shareholders have formally approved the 492 million-riyal (€131 million) deal with PIF to set up an Internet of Things (IoT) joint venture.

    The initial capital of the venture, which is 50 per cent owned by each party, can be expanded to 900m riyals (€250 million) three years after its establishment, if necessary. The company also received approval to form a joint venture with China’s Alibaba Group to establish a cloud computing venture in Saudi Arabia at an investment of 894m riyals (€238 million). In May, other participants in the joint venture were announced, including eWTP Arabia for Technical Innovation, Saudi Company for Artificial Intelligence (SCAI) and Saudi Information Technology Company (SITE).